|Social Security Benefits and Taxes|
You received a 1099/1042S from Social Security and now you wonder what to do next.
Some people have to pay federal income taxes on their Social Security benefits. This usually happens if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits. DO NOT count the benefits you receive on behalf of another person (example: children) on your tax return.
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.
How to figure your combined income
Your adjusted gross income
What is your tax rate if you are a non-U.S. citizen?
If you are not a U.S. citizen or resident, Social Security withholds federal income taxes from your benefits. The tax is 30 percent of 85 percent of your benefit (an effective tax rate of 25.5 percent).
They withhold this tax rate from the benefits of all nonresident aliens, unless you live in a country with which the United States has a tax treaty. Tax treaties do not permit taxing of U.S. Social Security benefits (or provide for a lower tax rate).
With what countries does the U.S. have tax treaties?
The United States has tax treaties with Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania, Switzerland, and the United Kingdom (defined as England, Scotland, Wales, and Northern Ireland). In addition, if you live in and are a citizen of India, your Social Security benefits are exempt from Federal taxes to the extent that your benefits are based on Federal, State or local government employment. (This list can change from time to time.)
How do you know the amount of taxes withheld from your benefits?
At the end of each year, Social Security will send a Form 1042S (Social Security Benefit Statement) to each beneficiary. This statement shows the amount of taxes withheld from your Social Security benefits.
Can you replace an SSA-1099/1042S for Tax Information
You can request a copy of your most recent SSA-1099 or SSA-1042S from Social Security at https://secure.ssa.gov/apps6z/i1099/main.html
An SSA-1099 is mailed to you in January showing the total amount of benefits you received in the previous year. If you are a nonresident alien who received or repaid Social Security benefits last year, you will receive an SSA-1042S instead.
For more information on taxation of Social Security Benefits, or to order the publication "Tax information for Older Americans" (Publication #554), call the IRS at 800-829-3676 or visit the IRS Web site.