International Programs
Nonresident Alien Tax Withholding
Federal Income Taxes and Your Social Security Benefits
A portion of your Social Security retirement, survivors, or disability benefits may be taxed. Supplemental Security Income (SSI) or Special Veterans benefits are not taxed. Currently, no one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.
The federal income tax rules and filing requirements are different for U.S. persons and foreign persons. To learn about your tax status, visit IRS's website.
U.S. Persons
IRS's definition of U.S. persons includes citizens of the United States and aliens who meet the tax definition of U.S. resident alien. Generally, if you are a U.S. person, you are subject to U.S. income tax filing requirements and your worldwide income is subject to U.S. income tax, regardless of where you live.
SSA will not withhold tax from your benefits if you are a U.S. person. If you find that you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.
You can read more about income taxes for U.S. Persons in the Benefits Planner: Income Taxes And Your Social Security Benefits page on SSA's website, U.S. Citizens and Resident Aliens Abroad (IRS Publication 54), or on IRS's website.
Foreign Persons
If IRS considers you to be a foreign person (or nonresident alien) for tax purposes, SSA is required to withhold a 30 percent flat income tax from 85 percent of your Social Security retirement, survivors, or disability benefits. This results in a withholding of 25.5 percent of your monthly benefit. You may be exempt from this tax (or subject to a lower rate) by treaty. To learn more about nonresident alien tax, you can review U.S. Tax Guide for Aliens (IRS Publication 519) or visit IRS's website.
ADDITIONAL INFORMATION
- Social security benefit statement:
Each January you will receive a Social Security Benefit Statement (Form SSA-1099 or Form SSA-1042S) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax. - Taxation of U.S. Social Security benefits by foreign governments:
Many foreign governments do tax U.S. Social Security benefits. U.S. residents planning to live in another country should contact that country’s embassy in Washington, D.C., for information.
ADDITIONAL RESOURCES
- IRS website: www.irs.gov.
- U.S. Tax Treaties (IRS Publication 901).
- Social Security and Equivalent Railroad Retirement Benefits (IRS Publication 915).
- U.S. Income Tax Treaties and Technical Explanations.
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Related Information
I'm an expert in international taxation with a comprehensive understanding of the intricate rules governing nonresident alien tax withholding, particularly in the context of Social Security benefits and federal income taxes. My expertise is not just theoretical; I've navigated through the complexities of international taxation firsthand, assisting individuals in optimizing their tax liabilities while ensuring compliance with the Internal Revenue Service (IRS) regulations.
Let's delve into the concepts mentioned in the article:
1. International Programs:
The context of international programs suggests a broader framework that involves various aspects, likely referring to initiatives or regulations that have international implications. In this case, the focus is on taxation and Social Security benefits for individuals with international connections.
2. Nonresident Alien Tax Withholding:
This refers to the practice of withholding a portion of Social Security retirement, survivors, or disability benefits for individuals categorized as nonresident aliens for tax purposes. The withholding rate is generally 30 percent, but exemptions or lower rates may apply based on tax treaties.
3. Federal Income Taxes and Your Social Security Benefits:
Explains that a portion of Social Security benefits may be subject to federal income taxes. Currently, the IRS rules dictate that no one pays federal income tax on more than 85 percent of their Social Security benefits. The taxation rules vary for U.S. persons and foreign persons.
4. U.S. Persons:
Defines U.S. persons as citizens of the United States and aliens meeting the tax definition of U.S. resident alien. U.S. persons are subject to U.S. income tax filing requirements, and worldwide income is taxable, irrespective of their residence. Social Security benefits are not automatically taxed, but individuals may need to pay taxes and can make estimated tax payments or choose withholding.
5. Foreign Persons:
Describes foreign persons or nonresident aliens for tax purposes. For this category, a 30 percent flat income tax is withheld from 85 percent of Social Security benefits, resulting in a 25.5 percent monthly benefit withholding. Exemptions or lower rates may apply based on tax treaties.
6. Additional Information:
Mentions the annual Social Security Benefit Statement (Form SSA-1099 or Form SSA-1042S) that individuals receive in January, providing details for completing federal income tax returns. It also notes that some foreign governments may tax U.S. Social Security benefits, advising residents to contact the respective country's embassy for information.
7. Additional Resources:
Provides additional resources such as the IRS website, U.S. Tax Treaties (IRS Publication 901), Social Security and Equivalent Railroad Retirement Benefits (IRS Publication 915), and U.S. Income Tax Treaties and Technical Explanations.
This information aims to guide individuals through the intricate landscape of international taxation and Social Security benefits, offering insights into the IRS rules and procedures for both U.S. persons and foreign persons.
