TN 12 (09-98)
GN 05010.001 Nonresident Alien Withholding Tax Provision
The 1983 amendments provided for withholding a tax from 50 percent of the monthly title II benefits paid to nonresident aliens, after December 31,1983, for months after November 1983. In 1994, the amount of the Social Security benefits subject to this tax withholding was changed to 85 percent, effective with benefits paid after December 31, 1994. The proceeds of this taxation accrue to Social Security trust funds.
In withholding this tax, SSA acts as a withholding agent of the Internal Revenue Service (IRS). Thus, resident status, citizenship determinations, evidence requirements, etc., are made under IRS policy and law and these may not be the same as SSA's definitions and requirements.
Under sections 871 and 1441 of the Internal Revenue Code (IRC), 85 percent of the benefit amount is taxed at a rate of 30 percent (or lower tax treaty rate). This means 25.5 percent of a nonresident alien's monthly OASDI benefits is withheld.
An individual's status at the time payment is made determines whether the nonresident alien tax must be deducted from his/her benefits, not his/her status during the period for which payment is due (except for months before December 1983).
Lump-sum death benefits are not taxed because they are not monthly benefits.
C. DEFINITIONS - UNDER THE IRC
1. United States
The United States consists of the 50 States, District of Columbia (D.C.), Guam and Northern Mariana Islands (NMI).
2. Citizen of a Possession of the U.S.
A citizen of a possession of the U.S. is an individual who is not otherwise a citizen of the U.S. and who has not become a citizen by naturalization in a State, Territory or D.C.