Where to enter equivalent of social security benefits from Poland

[Chris_4325]

The taxpayer receives retirement benefits from Poland, which are equivalent to US social security benefits. Should this income be reported the same way as US Social Security benefits on line 6a or as pensions on line 5a?

[Terry53029]

Depends on details of your client. Here is the agreement between Poland and USA.

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ssa.gov/international/Agreement_Pamphlets/documents/Poland.pdf

[TaxGuyBill]

If you are filing a 1040 and the client lives in the US, I think all foreign Social Security is entered as a pension, except for Canada and Germany.

If this is a 1040NR or if they live in another country, then the Tax Treaty becomes more pertinent.

https://www.irs.gov/publications/p915#en_US_2024_publink100097884

[Terry53029 · Accepted solution]

This is what IRS has to say on the issue.

https://www.irs.gov/businesses/the-taxation-of-foreign-pension-and-annuity-distributions

Foreign social security pensions

Absent application of a particular treaty provision, foreign social security pensions are generally taxed as if they were foreign pensions or foreign annuities. They are not eligible for exclusion from taxable income the way a U.S. social security pension might be unless a tax treaty provides for an exclusion.

Most income tax treaties have special rules for social security payments. Generally, U.S. treaties provide that social security payments are taxable by the country making the payments. However, a foreign social security payment may also be taxable in the United States if you are a U.S. citizen or resident, as a result of the saving clause. And remember, not all treaties have the same provisions for foreign social security pensions, so always refer to the specific treaty at issue.

[Chris_4325]

Clarification: That individual/taxpayer is a US citizen living in the United States and the retirement income he receives is for twenty years of work in Poland before he migrated to the US. He never worked in Poland as a US citizen. Currently, as a US citizen, he is subject to worldwide income. Had he worked in the United States for forty years, his entire Social Security benefits would have been entered on line 6a, and treated preferentially, meaning non-taxable at all, or partially taxable, but maximum 85% includable in income. Since part of the same kind of income is being received from another country, does that change the tax treatment of Polish Social Security? 

[BobKamman]

@Terry53029 It doesn't really help to quote IRS "Absent application of a particular treaty provision," because I think there is a treaty provision that applies.  What bothers me is that no one else has asked about this, anywhere.  There are some references online to this Polish social security system dating back only to 1999, and requiring 25 years of work to qualify (or at least 25 years of being eligible, as in this case).  So maybe that's why it has not been asked before.  I'm just not willing to go out on a limb and say the treaty applies, because then hundreds of practitioners for the next couple decades might rely on my view.  

[Terry53029]

@BobKamman I never said it applies just suggested it be researched rather than assume it is treated as "most" foreign pensions. 

[BobKamman]

@Terry53029  I didn't see where the quoted part ended and your added comment began.  "It wasn't until the 16th century that quotation marks as we know them started to take shape, when double commas became a popular way to introduce a quote. Finally, in 1748 the closing quotation mark made it's debut in Samuel Richardson's novel, Clarissa."