# Tax credit form 1116



## crisvic (Jan 25, 2020)

Good morning...A retired dual national u.s.-spain, living in Spain, has as only income her u.s. s.s. pension around $ 9.500 and her spanish s.s. pension around $14.000. She files in Spain and the U.S. Until now, on her u.s. tax return she used form1116, tax credit for her paid spanish taxes, around 2.500euros every year. Now I hear social security taxes paid abroad cannot be used as tax credit on form 1116. Is that true?...what alternatives are there?
Thanks so very much.


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## Bevdeforges (Nov 16, 2007)

crisvic said:


> Good morning...A retired dual national u.s.-spain, living in Spain, has as only income her u.s. s.s. pension around $ 9.500 and her spanish s.s. pension around $14.000. She files in Spain and the U.S. Until now, on her u.s. tax return she used form1116, tax credit for her paid spanish taxes, around 2.500euros every year. Now I hear social security taxes paid abroad cannot be used as tax credit on form 1116. Is that true?...what alternatives are there?
> Thanks so very much.


Unless she is filing in the US as "married, filing separately" I'm surprised that she would owe any US income tax at all on her income. (Or even have to file US taxes at all.)

When you say that "social security taxes paid abroad cannot be used as tax credit on form 1116" - where did you hear that? If someone is paying into the spanish "social security system" (usually as a working person) those "social security taxes" cannot be used to offset income taxes due in the US (on social security or any other sort of income). But if what she is paying on the spanish pension is Spanish income tax, then that should be eligible for the Foreign Tax Credit, no problem.


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## crisvic (Jan 25, 2020)

Bevdeforges said:


> Unless she is filing in the US as "married, filing separately" I'm surprised that she would owe any US income tax at all on her income. (Or even have to file US taxes at all.)
> 
> When you say that "social security taxes paid abroad cannot be used as tax credit on form 1116" - where did you hear that? If someone is paying into the spanish "social security system" (usually as a working person) those "social security taxes" cannot be used to offset income taxes due in the US (on social security or any other sort of income). But if what she is paying on the spanish pension is Spanish income tax, then that should be eligible for the Foreign Tax Credit, no problem.


Thanks so much...she files separatly (husband is NRA from Spain). I understand that she can continue to use form 1116, tax credit, as what she pays on her tax return in Spain 2500euros, are income taxes, not social security... Very grateful for clearing this up. Thanks


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