My wife is not a us citizen and receives social security from germany - does she have to pay us tax?

[flystol]

my wife is a resident alien - she gets socail security in germany to a local account there. Do we have to declare it and pay tax on it in US?  Germany does not tax it.

[DoninGA · Accepted solution]

Yes she does have to report the German Social Security income on a US tax return.

See this IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits  for information - https://www.irs.gov/pub/irs-pdf/p915.pdf#page=6

Canadian or German social security benefits paid to U.S. residents . Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the United States.

The German Social Security benefits received are reported on your US tax return in the section for reporting US Social Security benefits.  Form 1040 Line 20a, Form 1040A Line 14a

Using TurboTax -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Wages and Income (Personal Income using Home and Business)
• Click on I'll choose what I work on (if shown)
• Scroll down to Retirement Plans and Social Security
• On Social Security (SSA-1099, RRB-1099), click the start or update button

Up to 85% of Social Security becomes taxable when all your other income plus 1/2 your social security reaches:

• Married Filing Jointly - $32,000
• Single or Head of Household - $25,000
• Married Filing Separately - 0

[nashwkjr]

do I enter the entire amount or 85% of the total amount she received

[DoninGA]

The entire amount.  The software will calculate the taxable portion, if any.

[azgerman]

DoninGA, thank you for your clear answers. I'm not the original poster, but here's where I'm stumbling.

My wife is a German citizen and has a permanent resident visa ("green card") in the U.S. She receives a German pension (government Social Security equivalent), so I'm THIS CLOSE to reporting her income in accordance with the tax treaty.

The 1989 tax treaty was amended in 2006. If I interpret the amendment correctly, her retirement benefit is subject to U.S. taxes only if she is both a "resident and a "national" of the U.S. (AKA, "the other State").

What, if anything, am I missing?

Thank you in advance for your invaluable contributions to this forum.

Here's an excerpt from the Technical Explanation of the 2006 amendment:


Paragraph 2

Paragraph 2 deals with the taxation of pensions and other similar remuneration paid by, or out of funds created by, one of the States, or a political subdivision, local authority, or instrumentality thereof, to an individual in respect of services rendered to that State, subdivision, authority or instrumentality.

Subparagraph (a) provides that such pensions and other remuneration are taxable only in that State. Subparagraph (b) provides an exception under which such pensions are taxable only in the other State if the individual is a resident of, and a national of, that other State or the pension is not subject to tax in the Contracting State for which the services were performed because the services were performed entirely in the other Contracting State.

Pensions paid to retired civilian and military employees of a Government of either State are intended to be covered under paragraph 2.

[DoninGA]

For U.S. income tax purposes, lawful permanent residents (green card holders) are considered resident aliens.  As a US resident she is required to report her German SS income on a US tax return.  As stated in the tax year 2018 IRS Publication 915

[azgerman]

Okay, thanks, I've seen that, too.. The amendment language must not mean what I think it means.