# Social Security Number



## rashar

Good day all!
I have what might sound like a dumb question but thought I'd put it out there anyway.
When filing taxes, I understand that I can file my non American wife as NRA and claim married filing separately - however, I continually hear people advise getting either a social security number or a tax identification number. I am curious as to why? If the spouse will never live in the USA, will not work in the USA and is not eligible for any monies from the USA, then why would they want a social security number? 
What are the benefits in getting a social security number - what are the cons?
It seems like a lot of extra numbers in the system for people who are going to use them for what? 
Is a person who gets a SSN obligated to then file their own tax forms every year because they have a file in the IRS system? 
What happens to those people who give up their green cards or citizenship - do they stop using their numbers? 
I am somewhat confused as to why this would be a good thing for anyone - and what if any ramifications it could have on those holders at some point in the future.l 
Thank you.


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## BBCWatcher

The Social Security Administration does not reuse numbers, and with the current numbering system they've got enough numbers to last for several more generations. Your concern for the SSA is charming. 

Whether one has a tax filing obligation or not does not depend on whether one has a SSN/TIN or not.

I think the basic answer is that getting a number is free, so why not? Even if it's never actually used it's just one less thing to worry about getting on the off chance some need crops up (e.g. opening a U.S. financial account). It's also a requirement for international couples that choose Married Filing Jointly.

One common situation when having an SSN is useful is when an NRA spouse applies for Social Security survivors benefits. Yes, NRA spouses can often qualify for U.S. Social Security when their U.S. spouses die, but it depends on the situation. If the NRA spouse already has an SSN he/she can apply for entitled benefits much more quickly.


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## Bevdeforges

First of all, your NRA spouse cannot get a SS number unless s/he is in the US (at some point) on a visa that allows him or her to work. (Basically, to get a SS number, a person must be either a US citizen or resident in the US with a work permit of some variety - like a green card holder.) If they are truly NRA, the best they can get is an ITIN (taxpayer identification number). 

Now, why get one? Mainly that is because you cannot claim anyone as a dependent unless they have either a SS number or an ITIN. There are some very limited circumstances under which you can claim a NRA spouse as a sort of pseudo dependent, or it is possible to file jointly with an NRA spouse (though why anyone would want to expose an NRA spouse and their finances to the prying eyes of the IRS is beyond me).

What I'm not clear on is what would happen if you were, for example, to get an ITIN for your NRA spouse and then, years later, you move to the US with said spouse so that they are now entitled to a full fledged SS number. Not sure if the status of the ITIN number would change (while the number remains the same) or if you'd get a completely new SS number.

Having an SSN does not obligate you to file US taxes. That's only obligatory if you are a US citizen or resident and have income in excess of the threshold for your filing status. A non-citizen who works in the US and then returns to their home country still keeps the same SSN (and, in fact, will need it when claiming their social security benefits at retirement age).
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> or it is possible to file jointly with an NRA spouse (though why anyone would want to expose an NRA spouse and their finances to the prying eyes of the IRS is beyond me).


Simple: because Married Filing Jointly is America's most generous tax filing status, and many non-wealthy households (such as those with the U.S. citizen receiving a pension) are much better off financially if they file MFJ. Also, many NRA spouses either have already filed with the IRS or can reasonably be expected to do so in the future, so they don't have much information that the IRS doesn't already have (or can't figure out). Said another way, a lot of NRA spouses aren't wealthy.

Many tax professionals spend most or all of their time dealing with wealthy clients with complex taxes, some perhaps with questionable (ahem) tax stances. That's not most people.

Finally (and interestingly), as best as I can determine FBAR filing requirements are separately determined. NRA spouses don't generally have FBAR filing requirements. FATCA requirements still apply to both joint filers.

On edit: Yes, I seem to be correct. A Section 6013(g) election is not sufficient on its own to trigger a FBAR filing requirement for the NRA spouse. That makes sense because not making the election is a perfectly legal option, and then there'd be even less information shared. Also, FATCA still applies since that's on the IRS side of the house.


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## rashar

I understand that jointly filing taxes can result in greater deductions, however, does it not also increase your liability in that you are equally responsible for any taxes owing should that happen for some reason. If you file separate you are not obligated to pay should an issue arise where that occurs. I suppose one has to determine whether or not those deductions make much of a difference.
Thankyou for all the information, the biggest question seems to be the filing status and it appears that married separate is the way to go for a non res spouse if they choose to keep their financial information separate.


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## BBCWatcher

You are not obligated to pay the other spouse's tax liability when married filing separately, correct. With married filing jointly the tax liabilities are joint...but the tax liability itself is often substantially lower.

So, does the household want lower taxes (in many cases), or are there other considerations that outweigh the lower taxes? "It depends," but I would never presume to place a monetary value on those other non-monetary considerations for someone else.


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## Bevdeforges

If filing jointly, the ultimate tax liability may or may not be less than for one person filing MFS. And that can apply at the lower income levels as well as the upper (trust me on this one - it's my situation). 

But yes, you only have to file FATCA schedules if you meet the requirements AND must file a regular tax return. FBAR requirements are completely independent of whether or not you need to file a return. (I have a friend whose taxes I help with who is in this situation - total financial assets would mean she would have to file all those FATCA schedules, but because her income is below the filing threshold for her status, she only files the FBAR each year.)

Basically, there is no one answer for everyone living overseas when filing US tax returns, and basically no easy way to tell whether filing separately or jointly is "the way to go" without running the numbers in your own case. 

Don't forget that income may be calculated differently between the countries. For example, here in France, you start with "taxable income" which is your gross salary less most (but not all) of the social insurances withheld from your pay. The IRS wants that gross salary figure. The US may expect you to declare various interest and/or pension benefits not subject to tax in your country. And as far as taxes paid, don't forget that for US filing purposes you are on a cash basis as an individual - so you get credit for the income taxes you paid in 2012, regardless of what tax year they applied to. (Very relevant in France because you wind up paying taxes one to two years in arrears.) Any tax refunds are normally also included in US income to the extent they were deducted (or credited) in prior years.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> If filing jointly, the ultimate tax liability may or may not be less than for one person filing MFS. And that can apply at the lower income levels as well as the upper (trust me on this one - it's my situation).


Yes, that is correct. For a U.S.-non U.S. married couple living outside the U.S., Married Filing Jointly may be more favorable if one or more of the following conditions hold:

1. The U.S. spouse has earned income that cannot be fully shielded using the Foreign Earned Income and Foreign Housing exclusions and/or the Foreign Tax Credit;
2. The U.S. spouse has fairly substantial unearned income that is not substantially foreign taxed but is subject to U.S. tax;
3. Neither one of you have substantial unreimbursed medical expenses (unless they're really big);
4. You have children;
5. You want to take certain deductions (such as education and student loan interest deductions);
6. You have capital losses (or are "tax harvesting" investment losses to offset gains);
7. You want to make contributions to tax-advantaged accounts (although the "backdoor" method is available).

You just have to run the numbers both ways, and you should also think about the future because once you choose MFJ with a non-resident alien spouse you can switch back to MFS in a future tax year, but once you switch back to MFS you cannot return to MFJ. MFJ with an NRA spouse is a one-time election that, once cancelled, cannot be restored.

In my particular case MFJ makes sense primarily because of #1 and #2. However, I could easily imagine a future situation when it would make sense to switch to MFS, specifically if/when my spouse has substantial unearned income (interest, dividends, and capital gains) that are not substantially foreign taxed.


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## Bevdeforges

Those are, admittedly, the most common situations, particularly for US residents. However, I assure you that none of them apply in my case and filing jointly would cost me taxes to the US, whereas MJS is simply an exercise in paper pushing. Has mostly to do with the sources of income and how those sources are or aren't taxed here in France.
Cheers,
Bev


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## BBCWatcher

Your NRA spouse has substantial unearned income lightly taxed and/or very substantial earned income lightly taxed? It's hard for MFJ to hurt the U.S. spouse, but it can hurt the NRA spouse.


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## Bevdeforges

The way that French taxes are calculated, even with the higher rates, it's not uncommon not to have to pay much, if anything, in income taxes when the combined household income is fairly low. For my situation, the FEIE takes my income out of the picture, no muss, no fuss - and why bother reporting DH's income to the IRS at all?
Cheers,
Bev


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## BBCWatcher

Understood, but I was confused by your saying that MFJ would cost you taxes to the U.S., meaning it would make you (personally) worse off. That's very rare and apparently wouldn't apply in your case. You're fully shielded now and would remain so. (And it sounds like your spouse would as well.) But yes, there'd be more paperwork for the same result, so MFS is clearly your better option.

Getting slightly fancier and hypothetical, though, I could see circumstances where the filing status could allow the household to accumulate more excess foreign tax credits to use to offset future taxes on unearned income. (Not you, presumably.) So one might have to take an educated guess about the future. If, for example, you live in a high tax jurisdiction on earned income and expect to retire (for example) within 10 years and start collecting lots of unearned income that isn't going to be foreign taxed much (and which would be U.S. taxed), and if both spouses work, then maybe it makes sense to pile up foreign tax credits for the household.


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## Bevdeforges

US taxes are well known for being somewhat "speculative." And, you have to consider potential changes to the US tax code in the future. 

Simply put, without the FEIE, I would indeed have to pay US taxes on my earned income right now, husband or no husband. Filing jointly gives me no particular advantage on any score and, quite frankly, my husband objects to having his financial situation made available to the IRS. It makes far more sense in my situation to simply do everything legally available to reduce my taxable income to $0 and be done with it.
Cheers,
Bev


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## rashara

Thanks!
In trying to make the decision in filing status for US taxes, I looked at what the IRS says - I wanted to see what the base amount for tax owed would be for a couple with no other income than pensions.

The 2010 base amounts are:
$32,000 for married couples filing jointly.
$25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year.
$0 for married persons filing separately who lived together during the year.
---
So if a couple - one a US citizen and one a NRA - whose only income was government pension plans - decided to file jointly - we are claming a base amount of 32k before any tax is due. If a couple is married but filing jointly - am I reading this correctly in that there is NO base amount ie; you are taxed from the very first dollar?

If this is the case and I have not checked yet, would the pension income amount be wiped out by using credits? This seems to be an all or nothing which doesn't make much sense, especially given that if a person MFS could use the head of household, the base amount would at least be reasonable.


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## Bevdeforges

Basically, you're not reading things correctly. The base amount is used to compare your US social security benefits to the total of all other income you have (including other pensions that are not US social security) to determine what percentage is taxable.

But for those filing MFS, 85% of all social security benefits are subject to tax, no matter what your other income may be. (As I understand it, 85% is the maximum proportion of your US social security benefit that will be subject to tax.)

Take a look at Worksheet A in Publication 915 for an example of how this works. Publication 915 (2012), Social Security and Equivalent Railroad Retirement Benefits

However, after you have figured your taxable portion of your social security benefit, you are still entitled to take the personal exemption and the standard deduction (or itemized deduction, if you have enough).
Cheers,
Bev


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## rashara

Thank you.
I am trying to calculate all situations in advance of filing with MFS - laws vary so much in regards to income, pension, inheritance, gifts, tax refunds or even things as simple as a lottery winnings - what is considered income in one country may not be considered income in another and so the biggest problem that I see with MFJ, is that any of the above circumstances, could result in more of a headache than it's worth to save a little on a deduction at the beginning.
I appreciate all of your help - the last worksheet helped a lot!


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## BBCWatcher

Try running your taxes both ways (MFJ and MFS) and see what happens. For example, the free TaxAct.com can handle this stuff pretty well if you simply run through it twice.

If the savings are (or soon will be) "nontrivial" with MFJ, sit down with your non-resident alien spouse and discuss it like any other household financial matter. I think spouses should make these decisions jointly if at all possible.

As an example, I live in a relatively low tax jurisdiction (Singapore), and I cannot fully shield my earned income with the Foreign Earned Income Exclusion/Foreign Housing Exclusion. What I cannot shield tends to get U.S. taxed at high marginal rates that are above Singapore's rates. I also have decent U.S. source unearned income, and that also tends to help push me into the higher U.S. tax brackets, consuming credits, deductions, and exemptions. (So I can really use more help there with MFJ.) On the other hand, my NRA wife can fully shield her earned income with the FEIE (she gets a full separate one with MFJ), and her trivial foreign source interest income is already taxed at approximately U.S. rates. In our situation MFJ works quite well and can reasonably be expected to continue working quite well in future years: she stays at $0 tax with either filing status, and my taxes go down nontrivially (versus MFS). And since we're a single household that behaves like a single household (financially and otherwise), we're consequently better off as a household. Bev is in a different situation (fully shielded with the FEIE and perhaps also in a higher tax jurisdiction than Singapore, even with the social insurance offset), so MFS would make more sense for his household.


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