For an American citizen residing in Canada using Form 1040A, should
the taxable amount of U.S. social security benefits shown on line 14b be $0.00
due to the Canada-U.S. tax treaty?
Under the 1997 protocol to the Canada - U.S. tax treaty, the Canadian and
U.S. governments agreed to return to a residence-based system under which
social security benefits are taxable exclusively in the country where the
recipient resides. As a result, the entry for line 14b would be $0.00.
References:
- Tax Topic 423, Social Security and Equivalent Railroad
Retirement Benefits
- Publication 597, Information on the United States-Canada
Income Tax Treaty
- Publication 915, Social Security and Equivalent Railroad
Retirement Benefits
In addition to U.S. Social Security, I also receive British Social
Security. How should I report the British Social Security income?
Under the U.S. United Kingdom income tax treaty that entered into force
during 2003, social security income is taxable only by the country of residence.
If you are a resident of the U.S. for tax purposes, the income would be reported
and taxed in the U.S. You would not treat the income as U.S. social security
benefits. The entire amount would be taxable as pension and annuity income
on your U.S. tax return. Your "investment in the contract" for purposes of
determining the portion of each payment that is taxable would be $0. Under
the prior treaty with the UK, social security benefits were treated the same
way.
13.1 Aliens and U.S. Citizens Living Abroad: Canadian & U.S. Tax Issues
I am a Canadian citizen living and working in the U.S. for a U.S.
employer on a visa. Do I need to file both a U.S. tax return and a Canadian
tax return?
You must comply with both U.S. and Canadian filing requirements, if any.
In the United States, you generally are required to file a return if you have
income from the performance of personal services within the United States.
However, under certain circumstances, that income may be exempt from payment
of U.S. tax pursuant to the U.S.-Canada income tax treaty. You need to determine
what type of visa you have, and how that impacts your residency status in
the United States. If, based on the tax code and your visa status you are
treated as a U.S. resident, then your entitlement to treaty benefits will
be impacted. You must contact the Canadian government to determine whether
you must file a Candian tax return and pay Canadian taxes.
13.5 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Tax Withholding
Under my visa as a temporary nonresident alien, I'm not subject
to social security and Medicare withholding. My employer withheld the taxes
from my pay. What should I do to get a refund of my social security and Medicare?
If social security tax and Medicare were withheld in error from pay received
which was not subject to the taxes, you must first contact the employer who
withheld the taxes for reimbursement. If you are unable to get a refund from
the employer, file a claim for refund with the Internal Revenue Service on Form 843 (PDF), Claim for Refund and Request for Abatement.
You must attach the following to your claim:
a copy of your Form W-2 (PDF), Wage and Tax
Statement, to prove the amount of tax withheld;
Form I-797, INS Approval Notice, is needed if you have changed
your status from F-1 or J-1 to another status prior to filing the claim;
if your visa status changed during the tax year you should attach copies
of the pay stubs that cover the period of exemption from social security taxes;
a copy of INS Form I-94, Arrival/Departure Record, if you are still in
the United States;
a copy of your valid entry visa;
Form 8316, Information Regarding Request for Refund of Social Security
Tax, , or a signed statement stating that you have requested a refund
from the employer and have not been able to obtain one; and
a copy of Form 1040NR (PDF) , US Nonresident
Alien Income Tax Return (or Form 1040NR-EZ (PDF)),
for tax the year in question. Processing of your claim may be delayed if you
submit it less than six weeks after you filed Form 1040NR or 1040NR-EZ.
In addition to the documentation listed above foreign student visa holders
should also attach the following:
a copy of Form I-20, Certificate of Eligibility, endorsed by your student
advisor and stamped by the Bureau of Citizenship and Immigration Services;
and
a copy of the Employment Authorization Document of your Optional Practical
Training (e.g., Form I-766, I-538 or 688B).
if you are an exchange visitor, attach a copy of Form IAP-66 or DS-2019
to your claim.
File the claim, with attachments, with the IRS where the employer's returns
were filed. If you do not know where the employer's returns were filed, send
your claim to the Internal Revenue Service Center, Philadelphia, PA 19255.
For more information, refer to Publication 519, U.S. Tax Guide
for Aliens .
13.6 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Students
Are nonresident alien students, with F-1 or J-1 visas and employed
by a U.S. company during the summer, required to have federal income taxes
withheld from their paychecks?
The following discussion generally applies only to nonresident aliens.
Wages and other compensation paid to a nonresident alien for services performed
as an employee are usually subject to graduated withholding at the same rates
as resident aliens and U.S. citizens. Therefore, your compensation, unless
it is specifically excluded from the term "wages" by law, or is exempt from
tax by treaty, is subject to graduated withholding. Nonresident aliens must
follow modified instructions when completing Form W-4. Please refer to Publication 519, U.S. Tax Guide for Aliens, for directions on completing Form W-4 (PDF), Employee's Withholding Allowance Certificate.
13.8 Aliens and U.S. Citizens Living Abroad: Other
