# Is foreign Social Social Security taxable if it has been taxed in same country?



## expat2684 (Feb 2, 2019)

Hi, I live in Ireland where I believe there is a tax treaty in effect. I received Illness Benefit for a week off work this year and would like to know how to treat this when filing US tax return. It has already been taxed in Ireland. As this is unearned income, I assume I cannot exclude it using 2555, but surely I do not have to pay tax on it again? Thank you.


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## Bevdeforges (Nov 16, 2007)

expat2684 said:


> Hi, I live in Ireland where I believe there is a tax treaty in effect. I received Illness Benefit for a week off work this year and would like to know how to treat this when filing US tax return. It has already been taxed in Ireland. As this is unearned income, I assume I cannot exclude it using 2555, but surely I do not have to pay tax on it again? Thank you.


For US tax purposes "welfare benefits" are not considered income and thus don't have to be declared at all. Take a look at IRS Pub. 525 - there's a section on Welfare and Other Public Assistance Benefits.


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## Moulard (Feb 3, 2017)

Its also clearly articulated in the treaty under Article 18 (1) 



> b) notwithstanding the provisions of Article 19, payments made by a Contracting State under provisions of the social security or similar legislation of that State to a resident of the other Contracting State shall be taxable only in that other State.


So you would only be subject to Irish taxation on the illness benefit you have received from DEASP.


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## expat2684 (Feb 2, 2019)

Moulard said:


> Its also clearly articulated in the treaty under Article 18 (1)
> 
> 
> 
> ...


So it is definitely not necessary to declare the benefit?


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## Bevdeforges (Nov 16, 2007)

expat2684 said:


> So it is definitely not necessary to declare the benefit?


There is nothing "definite" when it comes to the IRS and foreign things, but the best way to go is simply not to declare it. IF (and it's a big IF) it's ever questioned, you mention both the article in the Treaty and the section on Public Assistance payments in the publication 525. But don't hold you breath waiting for someone to question it.


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## expat2684 (Feb 2, 2019)

Bevdeforges said:


> expat2684 said:
> 
> 
> > So it is definitely not necessary to declare the benefit?
> ...


Thank you for your response. I have to file six years - reasonable cause - in 2013 Illness Benefit was my sole source of income and only slightly over the threshold. Debating whether to file this year at all. From 2008 until 2013, Illness Benefit was my only income, I was six years out of work.


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## Moulard (Feb 3, 2017)

expat2684 said:


> So it is definitely not necessary to declare the benefit?


I am happy to stand corrected, but I believe that it is still classified as income, and as such should be reported as income. Its just that it is not taxable income.


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## expat2684 (Feb 2, 2019)

Moulard said:


> expat2684 said:
> 
> 
> > So it is definitely not necessary to declare the benefit?
> ...


So how would I go about reporting non-taxable income. Is there a form to fill in? It’s not apparent to me on the 1040 where this entry would go in this case.


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## Bevdeforges (Nov 16, 2007)

expat2684 said:


> So how would I go about reporting non-taxable income. Is there a form to fill in? It’s not apparent to me on the 1040 where this entry would go in this case.


Take a look at that Publication 525. They categorize taxable and non-taxable income and in some cases, they even say that certain revenues are NOT considered income at all (and so should NOT be reported). It's a fine line, and something that you have to apply to your foreign income sources "in good faith." But generally speaking, most foreign sources of income aren't all that carefully reviewed, especially if they aren't well into the 6 figure amounts.


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## expat2684 (Feb 2, 2019)

Bevdeforges said:


> expat2684 said:
> 
> 
> > So how would I go about reporting non-taxable income. Is there a form to fill in? It’s not apparent to me on the 1040 where this entry would go in this case.
> ...


Ok. In 525 it lists Welfare payments as non-taxable, it also mentions that Social Security is generally non-taxable when it is the only source of income. 

In 2013, that year, I was paid Illness Benefit only - which only goes about 1K over the threshold. 

To me, it should be non-taxable if it is considered taxable in Ireland, as per the Article in the Treaty.


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## Bevdeforges (Nov 16, 2007)

expat2684 said:


> To me, it should be non-taxable if it is considered taxable in Ireland, as per the Article in the Treaty.


Tax treaties don't work that way. (Don't ask me why - they just don't.)

And in the US, "Social Security" refers strictly to retirement benefits (well, maybe to the Social Security disability benefits, too). Your Illness Benefit is considered "Public Assistance" or "Welfare" and as such, just don't bother reporting it. (Oddly enough, that also applies to foreign unemployment benefits, despite what it says in the publication about US unemployment benefits. Makes no sense, but that's not news.)


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## expat2684 (Feb 2, 2019)

Bevdeforges said:


> expat2684 said:
> 
> 
> > To me, it should be non-taxable if it is considered taxable in Ireland, as per the Article in the Treaty.
> ...


My goodness, it’s all confusing, isn’t it? 

I’m not going to report it, it IS Welfare and not a whole lot of €s either. 

Thank you so much. Any help I can get with this is much appreciated.


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