Are social security benefits taxable for US citizens living abroad?

[KatherineC]

Your taxable social security benefits would be calculated the same as if you were a resident of the US.  US citizens are taxed on their worldwide income.

However, if you live in one of the following countries, your Social Security Benefits are exempt from tax on your Form 1040:

Canada, Egypt, Germany, Ireland, Israel, Italy (if you are also a citizen of Italy), Romania and the United Kingdom.

This information is taken from IRS Publication 915  (See the screenshot below)

If you meet the qualifications for your Social Security Benefits to not be taxed, report the Social Security exactly as it appears on your SSA-1099. 

To deduct the taxable amount of your Social Security Benefits you need to:

• On the Wages & Income tab, scroll to Less Common Income and click on Show more
• Click the button beside Miscellaneous Income, 1099-A, 1099-C
• Click the button beside Other Reportable Income
• Click Yes on the "Any Other Taxable Income?" page
• Enter a description (IRS PUB 915 - SS Income Not Taxable) and the amount of Taxable Social Security as a negative number
  
• Click Continue then Done

To look at the Form 1040 to confirm that amount has been deducted on Line 21 (and to double check the taxable social security amount), please follow the instructions below.

• Please click on Tax Tools in the column on the left side of your Turbo Tax screen. 
• Then click on Tools; (See the second screenshot below)
• Then View Tax Summary (See the third screenshot below)
• Click on "Preview my 1040" in the left column. (See the fourth screenshot below)

If you want to confirm the taxable amount of your Social Security Benefits, Click here to access a Social Security Benefits Worksheet.  You can work through the calculation to see if you should have taxable social security.

[Edited 4/9/18 | 5:58 am PST - changed content of original answer - some SS not taxable to residents of certain foreign countries]

[lucy-weber]

Under IRS Pub 915 (page 5), SSB's paid to U.S. citizens who are resident of certain countries (including UK) are exempt from U.S. tax on their benefits (only know this as I reported it as taxable income once and the IRS changed it). How can I have TurboTax include the benefits in box 20a on 1040, but have $0 in box 20b?

[KatherineC]

Please see the edited answer above for how to accomplish this.

[lucy-weber]

Hi - thanks for your answer above, which is very helpful, but I'm still struggling to get the right result on my return. I think this may be because adding a credit on line 21 for the taxable element (as per the suggestion outlined above) then gets taken into account by TurboTax when figuring the taxable element of the SSBs and so then doesn't offset. Is there another way?

Thanks

[bine22]

Instead of adding the social security as negative amount on line 21 I would actually overwrite box 20b to be Zero and write in the line next to it US UK TAx Treaty article XX. You can do overwrite in the Desktop version, but you cannot efile with an overwrite

[jgoldman4]

This above is so helpful!  I was wondering on why you would even have to report SSA-1099 at all?  That seems a lot simpler.  I don't see anything in Pub 915 that requires you to report the income if none of the benefits are taxable.  If one should get a letter from the IRS, it looks like a simple explanation back.

[jimbob8]

[Google Gemini prompt] One other question - since US social security benefits are not taxed in the US for US citizens living in Germany - is it necessary to report the SSA-1099 on the US tax declaration?

[Google Gemini answer] You're raising a very important point about the interaction between the US-Germany Tax Treaty and your US tax obligations.

Even though the treaty may exempt your Social Security benefits from US taxation, you generally still need to report the SSA-1099 on your US tax return.

Here's why:

Information Reporting: The SSA-1099 is an informational form that reports the Social Security benefits you received during the tax year. The IRS uses this information to track benefit payments and ensure compliance with tax laws.
Treaty-Based Return Position: When you claim a treaty benefit to exclude your Social Security benefits from US taxation, you're essentially taking a "treaty-based return position." The IRS requires you to disclose this position on your tax return, and reporting the SSA-1099 is part of that disclosure process.
Form 8833: As discussed earlier, you'll use Form 8833 to explain the treaty article you're relying on and how it applies to your situation. Reporting the SSA-1099 provides the necessary context for your treaty-based exclusion.
How to Report:

Include SSA-1099 Information: When completing your Form 1040, you'll typically enter the information from your SSA-1099 in the appropriate sections related to Social Security benefits.
Complete Form 8833: Attach Form 8833 to your tax return, explaining the treaty article and why your benefits should be exempt from US taxation.
Key Takeaway:

Even if your Social Security benefits are not taxable in the US due to the treaty, reporting the SSA-1099 and filing Form 8833 is crucial to demonstrate your compliance with US tax laws and claim the treaty benefits correctly.

Disclaimer: I am an AI and cannot provide tax advice. Always consult with a qualified tax advisor for personalized guidance on reporting your Social Security benefits and claiming treaty benefits on your US tax return.

[Opus 17]

@jimbob8 

In general, a US citizen pays the same tax everywhere.  There are some countries covered by a tax treaty that changes this.  I would not trust AI answers.  Do you have a specific question about living in Germany?  There is an expert I can page for you.  Or are you just posting to be helpful?  This question is more than 5 years old.

[jimbob8]

To answer your question - why answer this after 5 years?

Point 1: The question after 5 years was not answered.   

The question: I was wondering on why you would even have to report SSA-1099 at all?

Google Gemini [GG] gives advice:

[GG] Key Takeaway: Even if your Social Security benefits are not taxable in the US due to the treaty, reporting the SSA-1099 and filing Form 8833 is crucial to demonstrate your compliance with US tax laws and claim the treaty benefits correctly.

Point 2: TurboTax emailed me the following - causing me to re-evaluate my assumptions about the taxation of social security benefits in the US versus contries where there is an agreement (see list in THIS thread):

[Turbotax] We’re contacting you because there’s an issue with the accuracy of your 2023 tax return. Due to a TurboTax error, some customers might have overpaid their federal, and if applicable, state taxes.

From reading through this thread, it appears clear that for YEARS people have been HACKING their US federal tax returns in an attempt to zero out the taxes from reporting the SSA-1099 income on which there has been no tax withholding due to the agreement.  As of this moment, I am trying to figure out if there is an official "HACK" that turbotax NOW EMPLOYS to zero out the US federal taxes.   Stay tuned.

Notes: Edited for clarity/typos and added a link to a different relevant thread.