german social security

[oceanlovin'ea]

Okay, guys. This one is a doozie. An older couple came in....referral from client. She is german. But she lived in Canada for many years and in U S. At some point in her life, she went back to Germany and worked for about 15 years. Then came back to US. She has permanent VISA now. But because she worked in Germany she gets social security payments from them.
They got a letter last year (in German) about the social security being taxable. She is in her 80's and it has been so long since she read or spoke German, she is VERY rusty. She could figure out that they were saying that since 2005 she was supposed to be claiming her german social security on her US tax return. They brought me the letters (in German) to see if I could find out how much trouble they are in.
I did a google german to english translation. That was really cool. But it is a pretty literal translation and some of the German names didn't translate. It appears that for people that were getting the social security before 2005, 50% is considered taxable. But she has never received any 1099 of any sort from Germany. So I don't know how I would report it.

My question to all of you is Have any of you run across this situation? I was thinking about calling IRS Practitioner Priority Line to see if they knew anything about this, but I'm not really sure if they would.
How would you handle the situation? Someone they talked to in Germany said they would hear from IRS about it. But I don't know how or why as the information doesn't seem to be reported.

Thanks.
Linda

[DTS]

I have run across this once. Check this:

http://www.irs.gov/pub/irs-pdf/p915.pdf check pg. 5, second column.

D

[arizonaCPA]

check tax treaty

the IRS pub section is for non-residents. Sounds like you have a permanent US resident. first, check the US-Germany tax treaty. The IRS pub on tax treaties likely has info. might also try a google search.

[gkaiseril]

The IRS page for the U.S. German Tax Treaty:

http://www.irs.gov/businesses/international/article/0,,id=169486,00.html

The text of the treaty:

http://www.irs.gov/pub/irs-trty/germany.pdf

The German pension will only be taxed in the U.S.

[Gretel]

Linda, I can help with the German translation. Just send me an email. One of the confusion between German retirement benefits and USA retirement benefits is that only rich people in Germany have other pension that Social Security, so almost everyone calls this their pension.

If this is a permanent resident of the USA then her German SS is treated the same as US SS. If she gets this deposited into a US bank account then you just have to add up a year worth of deposits. If she gets this into a German bank account you will need to use the exchange rate for each month. Germany doesn't send any tax forms at year end.

[oceanlovin'ea]

Gretel

Thanks so much. I am about to go out the door right now. But tomorrow I will get in touch with you. Maybe I can fax the letters to you.

Linda