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My husband and I are retiring in France. Both of us have US Social Security benefits due us. I am a US citizen, spouse is a non-resident alien. If we elect to file a joint 1040 so that he is treated as a US taxpayer, will we then not have to pay tax on his benefits?

If so, how would we go about getting the withheld tax back (since I understand the tax is withheld at source)?

Thank you in advance for your response!

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For many people, Social Security benefits are taxable in part as ordinary income, and Social Security offers to withhold tax (at certain specific rates) from the benefit paid and send the money to the IRS as tax withheld. As much as 85% of the benefit might be taxable income to the beneficiary. The exact taxable amount is computed on a Worksheet that is not sent to the IRS with the tax return and it takes into account things like the foreign earned income claimed on the tax return. This is true regardless of residence of the Social Security beneficiary. Since the OP's husband is a nonresident alien, there may be (I am not sure about this) mandatory income tax withholding at 30% from the benefit paid; the mandatory 30% withholding rate certainly applies for IRA and 401(k) distributions sent to nonUS addresses.

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  • s/nonUS addresses/nonUS persons/ US citizens and permanent residents located in another country should still be withheld as US persons, not at 30%; see pub 54. That also says NRA spouse of a US person electing to be taxed as a US resident and filing joint includes resident wage withholding, but doesn't mention nonwage withholding, so I think they have to wait and claim that part on the return. – dave_thompson_085 Feb 14 '20 at 5:42
  • Apparently, a definitive answer simply doesn't exist. I've been told by an IRS assistant that their internal guide rules say that they are not answering any questions pertaining to the form 1042-S, which is the form that a non-resident alien receives that indicates their soc sec benefit amount and the tax amount withheld. There is no place on the 1040 where you enter the amount rec'd, only the tax paid. So the IRS states a NRAlien can elect to be taxed as a US citizen, but there's no line to report the soc sec benefits rec'd! Has anyone ever found a way and rec'd the tax back? – Jiglet Feb 17 '20 at 11:00

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