What would be the withholding tax rate?

[jimgilly]

Does anyone know what would be the US tax withholding rate for a Thai non-US citizen/resident who is eligible to receive US social security benefits?

 

I know it is typically 30% of 85 of the benefit but then there is a reduction because of the US/Thai tax treaty.  What I haven't been able to find out is what that rate is.  Thanks for your help.

[taxout]

The US-Thailand Tax Treaty does not provide for reduced withholding tax on US social security payments, so the usual 30x85 rate applies.

 

The treaty does provide, though, that the payments will not be subject to Thai income tax.

[nigelforbes]

The effective rate is 24.5%, the OP is not a US citizen and is not recieving the SSc payment in his home country where a DTA exists. The tax deducted at source was/is recoverable by filing a US tax return although there is some uncertainty about this since during the covid years under Trump the rules regarding allowances and deductions for non-resident green card holders may have changed..

[taxout]

What "tax return" to recover the tax are you possibly talking about here. The OP says the recipient is not a US citizen or resident. No green card. Just your usual non-resident alien for whom withholding covers the US tax in full, no return required.

 

[nigelforbes]

17 minutes ago, taxout said:

What "tax return" to recover the tax are you possibly talking about here. The OP says the recipient is not a US citizen or resident. No green card. Just your usual non-resident alien for whom withholding covers the US tax in full, no return required.

 

If the OP is eligible to receive US SSc benefits that would indicate he has lived and worked in the US for at least 10 years, that would further indicate that he has a green card (he doesn't say he doesn't), existing or expired or abandoned. And since he is eligible to receive SSc benefits, that means he has an SSc number, further evidence pointing towards a green card. SSc retirement benefits do not require US residency or the existence of a current Green Card.

 

I abandoned my US Green Card in 1985 following 15 years in the US. Today, I receive SSc retirement benefits which are taxable at an effective 24.5%, as long as I receive them whilst not living in the UK.....in the UK there is no US tax is withheld, per the DTA.

 

Every year I file a US tax return to reclaim the withholding tax, at least I did until 2016. Up to that point, the Treasury sent me a tax refund cheque every year. When Trump came into office strange things happened and my tax refund was ignored. After he left office and during covid several back dated years tax returns were processed and tax refund cheques issued. 

 

 

 

 

[taxout]

The OP specifically says the person isn't a US resident. Case closed.

[nigelforbes]

31 minutes ago, taxout said:

The OP specifically says the person isn't a US resident. Case closed.

He doesn't have to be a US resident, why would he? I haven't been US resident since 1985 and I have collected US SSc for the past 11 years. 

[jimgilly]

21 hours ago, nigelforbes said:

If the OP is eligible to receive US SSc benefits that would indicate he has lived and worked in the US for at least 10 years, that would further indicate that he has a green card (he doesn't say he doesn't), existing or expired or abandoned. And since he is eligible to receive SSc benefits, that means he has an SSc number, further evidence pointing towards a green card. SSc retirement benefits do not require US residency or the existence of a current Green Card.

 

I abandoned my US Green Card in 1985 following 15 years in the US. Today, I receive SSc retirement benefits which are taxable at an effective 24.5%, as long as I receive them whilst not living in the UK.....in the UK there is no US tax is withheld, per the DTA.

 

Every year I file a US tax return to reclaim the withholding tax, at least I did until 2016. Up to that point, the Treasury sent me a tax refund cheque every year. When Trump came into office strange things happened and my tax refund was ignored. After he left office and during covid several back dated years tax returns were processed and tax refund cheques issued. 

 

 

 

 

Nigel, I found there is a 30% withholding on 85% of the social security benefit which is effectively 25.5%.  However, no where could I find where it states you can file a tax return to get a refund for the tax withheld.  Do you have a link or source that provides that the social security withholding income tax is in fact refundable?  Thanks.

[nigelforbes]

15 minutes ago, jimgilly said:

Nigel, I found there is a 30% withholding on 85% of the social security benefit which is effectively 25.5%.  However, no where could I find where it states you can file a tax return to get a refund for the tax withheld.  Do you have a link or source that provides that the social security withholding income tax is in fact refundable?  Thanks.

Yes, that's correct, I said 24.5% but I now see that it's 25.5% - the 85% rule is also correct

 

https://www.americansabroad.org/information/social-security/

 

My initial source for the tax reclaim information came to me from IFBU in London and was then repeated by IFBU in Manilla. I just checked my gmail folder for the correspondence on this topic and oddly all emails to/from IFBU's earlier than 2018 have now been deleted, I really don't understand why, perhaps because they are automatically expired?

 

Between 2011 and 2016 I filed 1040EZ NR forms to recover the tax and as said previously, that worked just fine. In 2018 I became UK resident for tax purposes once again which meant my SSc payments were no longer taxed at source. In June this year I switched back to Thai tax resident and my SSc payments are received here, oddly, without tax being withheld. I think this may be an error on Baltimore's part because of my flip flop of banks and they have assumed I'm an American.

 

I'll continue to search for the offical word on this topic, if you need something more quickly you might try emailing IFBU Manilla at [email protected]

Page 29 of the following link confirms much oh what we've discussed and specifically refers to non resident Green Card holders and taxation.

 

https://www.ssa.gov/pubs/EN-05-10137.pdf

 

Finally, I've done a quick search for more information on this subject but can't find anything specific other than a statement that anyone who had tax deducted can file a tax return, although the statement wasn't qualified..

 

 

[nigelforbes]

Here's one piece:

 

Any US citizen or any person holding a green card has the obligation to file US tax returns and to pay all US taxes. In the case of a green card holder, this remains so even if the green card has “expired” and the individual has not returned to the USA for many years.

 

https://americansoverseas.org/en/green-card-holders/

[nigelforbes]

1 hour ago, jimgilly said:

Nigel, I found there is a 30% withholding on 85% of the social security benefit which is effectively 25.5%.  However, no where could I find where it states you can file a tax return to get a refund for the tax withheld.  Do you have a link or source that provides that the social security withholding income tax is in fact refundable?  Thanks.

I found an email from IFBU London dated September 2014:

 

"If you reside in the UK then tax will not be withheld from your benefits. If you choose to keep your Thailand address then to stop the tax withholding, you must file a US tax return based on the fact that you hold an expired US resident alien card".

 

It is of course possible that things have changed since then but I'm not aware they have, given that the IRS sent me overdue refund checks two years ago, I don't believe they have..

[jimgilly]

2 hours ago, nigelforbes said:

Here's one piece:

 

Any US citizen or any person holding a green card has the obligation to file US tax returns and to pay all US taxes. In the case of a green card holder, this remains so even if the green card has “expired” and the individual has not returned to the USA for many years.

 

https://americansoverseas.org/en/green-card-holders/

So reading this, the US takes the position if a non-US citizen was issued a green card and they no longer live in the US,  they are still subject to US income taxes on any worldwide income they earn. 

 

I find that hard to believe as it's equivalent to financial slavery over subjects not only who are not US citizens, but not even residing in the country.   Then again, the US is a hegemony and they do think they are the world's police but fortunately those days I believe are about to come to an end.  At least, let's all hope so.

[nigelforbes]

37 minutes ago, jimgilly said:

So reading this, the US takes the position if a non-US citizen was issued a green card and they no longer live in the US,  they are still subject to US income taxes on any worldwide income they earn. 

 

I find that hard to believe as it's equivalent to financial slavery over subjects not only who are not US citizens, but not even residing in the country.   Then again, the US is a hegemony and they do think they are the world's police but fortunately those days I believe are about to come to an end.  At least, let's all hope so.

I gave up my green card in 1985, at that time I could just walk away without any tax obligations thereafter. Subsequently things changed, anyone who gives up their green card now is obliged to fulfill financial obligations for many years.....it's a nonsense and I'm glad I got out when I did.