Tag Archive for Social Security

Canada Pension Plan (And Other “Foreign Social Security”), The “Net Worth” Test, Form 8854 And Form 8938

John Richardson

Q. How does the inability of the state of Rhode Island to pay its employee pensions help us understand the “net worth” of a U.S. citizen wanting to renounce U.S. citizenship?

A. The answer (like most wisdom in the modern world) is explained in the following tweet.

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Credit for the Elderly or Disabled

Debra Thompson

You may be able to take the Credit for the Elderly or the Disabled if you were age 65 or older at the end of last year, or if you are retired on permanent and total disability, according to the IRS. Like any other tax credit, it’s a dollar-for-dollar reduction of your tax bill. The maximum amount of this credit is constantly changing.

You can take the credit for the elderly or the disabled if: Read more

Pay your taxes in cash at 7-11 – start of even better things to come?


One of the ways individuals and businesses can pay their federal taxes if they don’t want to do so or cannot do so via automatic bank withdrawal, credit card or check is to go to their local 7-Eleven-11 store and pay by cash.Per the IRS instructions, the fee is $3.99 and there are some actions that need to be taken online before going to 7-Eleven. That action includes entering your Social Security number. You then get a number to take to 7-Eleven to complete the transaction. The cash limit is $1,000.

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Your Social Security Benefits May be Taxable


If you receive Social Security benefits, you may have to pay federal income tax on part of your benefits. These tax tips will help you determine if you need to pay taxes on your benefits.

Form SSA-1099. If you received Social Security benefits in 2015, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount of your benefits. Read more

Receiving Social Security Can Be Taxing

TaxConnections Picture - Social Security Card - 7-23-15 - square

Generally, your Social Security (SS) benefits are not taxable until your modified adjusted gross income (MAGI) is more than the base amount for your filing status. MAGI is your regular AGI (without Social Security income) plus 50% of your Social Security income plus tax-exempt interest income plus certain other infrequently encountered modifications.

The base amounts (threshold where the SS benefits become taxable) are:

• $25,000 if you are single, a head of household, a qualifying widow or widower with a dependent child, or married filing separately and did not live with your spouse at any time during the year;

• $32,000 if you are married and file a joint return; Read more

How To Account For Social Security And Medicare Tax On Unreported Tip Income

Tips word in white 3d letters on a background of hundred dollar bills in cash money as a bonus, thank you or appreciation of excellent service

If you work in an industry where it is customary to receive a portion of your income from customer tips, you are required to pay Social Security and Medicare taxes on those earnings. However, it is only possible to pay these taxes during the year if you report your tip income to your employer. If you receive cash and charge tips of $20 or more per month from any one job, you are required to report these to your employer. If you did not report all of these tips to your employer, you are required to report and pay the additional Social Security and Medicare taxes that should have been paid on these unreported tips. This you do as follows:

• You must complete Form 4137, Social Security and Medicare Tax on Unreported Tip Income. This form is used to calculate the tax in these unreported tips. Read more

Tax Consequences For Foreign Students…Think F, J Visas

TaxConnections Picture - Passport With SS 2 - square

My husband and I chartered a course ourselves long ago in the stormy waters of visas, tax treaties and tax consequences. Considering taxes have just got even more complicated, so its no surprise that I field quite a lot of questions from various visa holders especially foreign students on F-1 visas. Suffice to say that the range of information for foreign students is too much to cover in one blog post, so I will focus on the main points. If you need any more information, you know where to reach me!

If you are a foreign student, you already know from your university that you are one of those who are subject to special rules with respect to the taxation of your income. Usually a foreign student is on an F, J, M, or Q visa. Read more

Is Social Security Taxable?

TaxConnections Picture - Social Security Card - 1 - square
A classic case of the government giveth and the government taketh away.

One of the most common web-search phrases entered is this: “Is social security taxable”? The answer: It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people Read more

What Expatriating Americans Need To Know About Their Social Security Benefits

TaxConnections Picture - Passport With SS 1 - square

As we pointed out in our post entitled US Expatriation Continues to Increase At a Record Pace in 2014! Here we discussed that the number of Americans renouncing U.S. citizenship stayed near an all-time high in the first half of the year before rules that make it harder to hide assets from tax authorities came into force (FATCA – Effective Date July 1, 2014).

The number of Americans renouncing U.S. citizenship increased 39 percent in the three months through September after rules that make it harder to hide assets from tax authorities came into force.

People giving up their nationality at U.S. embassies increased to 777 in the third quarter, Read more

Opting Out of Social Security For A Minister

TaxConnections Picture - Social Security Card - square

One of the tax options given to a minister is the ability to opt out of social security. This is a step that should be taken after a great deal of deliberation, as the decision is irrevocable. In order to opt out, the minister must file Form 4361 and certify that he or she opposes, either conscientiously or because of religious principles, the acceptance of any public insurance (with respect to services performed as a minister), including social security and Medicare coverage. Note that the objection is to the use of ministerial earnings for public insurance. Economic considerations or other non-religious reasons are not valid factors for opting out. Unfortunately, many likely opt out for economic reasons. Some faith groups actively promote opting out for their ministers.

The minister opts out only in relation to ministerial earnings. If he or she is employed in a Read more

Newly Wed And Starry Eyed… Here Are Some Tax Tips To Remember

TaxConnections Picture - Truck - Moving

We were attending a dear friend’s daughter’s engagement when this thought occurred to me that most newly weds don’t think of the change in their Tax Filing Status till Tax Time. Yes, blame it on my tax “nerd”i-ness!! I don’t mean to burst the newly wed pink bubble, but these are important things to remember!

Now that DOMA, Section 3 has been over-turned by the Supreme Court as well, there’s even more details to keep in mind.

Here are several tips for newlyweds from the Internal Revenue Service:

• It’s important that the names and Social Security numbers that you put on your tax return match your Social Security Administration records. If you have changed your name, report Read more

United States Social Security and Working Overseas

TaxConnections Picture - SSN and PassportUnited States Social Security and Medicare taxes continue to apply to wages for services performed as an employee working outside of the United States if you are working for an “American employer”. Similarly, if you are abroad and you are a self-employed US citizen or resident you generally are subject to the so-called “self-employment tax”. Self employment tax is a social security and Medicare tax on net earnings from self-employment. You can learn more about Self employment tax when working abroad from my blog post here on TaxConnections.

Many questions arise about US social security when one is working overseas. Some of these questions are: If you are working for an American employer, do you have to pay tax to both the US and the foreign host country’s social security systems? What happens if you are employed overseas but you are neither self-employed nor working for an American employer? If you do not have enough credits under the US social security system to qualify for benefits, does your work overseas “count” for purposes of US eligibility? If you already have enough credits under the US system to qualify for benefits, what happens with your foreign social security benefit credits — does the US count your foreign social security credits toward your US coverage?

Learn the answers in today’s blog posting.

Totalization Agreements

The US has negotiated international Social Security agreements, called “Totalization agreements,” with 24 countries. See the list here. Totalization agreements achieve two main goals: The first goal is to eliminate the possibility of Read more