Where to Report Foreign Social Security Income on Form 1040

Where you report foreign Social Security income on Form 1040 depends on whether a US income tax treaty covers the payment. If a treaty directs the US to treat the foreign benefit as if it were paid under US Social Security law, the payment goes on Lines 6a and 6b, the same lines used for a domestic Social Security check. If no such treaty applies, the IRS treats the payment as foreign pension or annuity income, and it belongs on the pension and annuity lines instead.

Why the Line Depends on the Treaty

For US income tax purposes, a “social security benefit” means a monthly benefit under Title II of the Social Security Act or a tier 1 railroad retirement benefit.¹ That definition covers only US Social Security. A payment from another country’s social security system is not a “social security benefit” under the Internal Revenue Code by default.

The IRS states this directly: foreign social security benefits are taxable as annuities unless a tax treaty either exempts them from US tax or treats them as equivalent to US Social Security.² Without treaty protection, the payments “are generally taxed as if they were foreign pensions or foreign annuities” and “are not eligible for exclusion from taxable income the way a U.S. social security pension might be.”³

So the first question is not which line to use. It is whether the country paying the benefit has an income tax treaty with the United States that includes a social security article, and what that article says. Treaty provisions commonly fall into three patterns:

The benefit is taxable only in the country where the recipient lives, and the residence country must treat it as its own social security.
The benefit is taxable only in the country that pays it, exempting it from tax in the residence country.
The treaty has no social security article, leaving the default pension or annuity treatment in place.

Most US treaties include a saving clause that lets the US tax its citizens and residents on worldwide income as if the treaty did not exist, but the US Model Income Tax Convention exempts social security articles from the saving clause.⁴ The upshot is that even US citizens can rely on a treaty social security article when the specific treaty tracks the model. Read the actual treaty article for the country paying you before deciding where the income lands on your return.

Lines 6a and 6b: Benefits Treated as US Social Security

When a treaty says foreign social security must be treated as if it were paid under US Social Security law, the payment goes on the same lines as domestic benefits. The clearest examples are Canada and Germany. Under the income tax treaties with both countries, social security benefits paid to US residents are treated for US tax purposes as if they were US Social Security payments. Include them on Line 1 of the Social Security Benefits Worksheet in the Form 1040 instructions; the taxable portion flows to Form 1040 Line 6b, and the gross amount goes on Line 6a.⁵

For Canada, the treaty provides that social security benefits are taxable only in the country where the recipient lives.⁶ For Germany, paragraph 5 of Article 18, added by protocol, contains the same residence-country-only rule and directs the residence country to treat the benefit as though it were paid under its own social security legislation.⁷ Canadian or German social security paid to a US resident runs through the same taxability calculation as a US Social Security check.

A useful detail: recipients of Canadian or German social security do not have to file Form 8833 to disclose the treaty position.⁵ Those two countries are a recognized exception to the usual treaty disclosure requirement.

Calculating the Taxable Portion for Line 6b

Foreign social security treated as US Social Security uses the formula in IRC Section 86 to determine the taxable portion. Depending on your income, 0%, up to 50%, or up to 85% of the combined benefits will be included in taxable income.¹

The test compares your modified adjusted gross income (adjusted gross income calculated without any social security, plus tax-exempt interest) plus half of your combined US and treaty-covered foreign social security benefits against the statutory thresholds.

For single filers:

Test amount at or below $25,000: none of the benefits are taxable.
Test amount between $25,000 and $34,000: up to 50% of the benefits are taxable.
Test amount above $34,000: up to 85% of the benefits are taxable.

For married filing jointly:

Test amount at or below $32,000: none of the benefits are taxable.
Test amount between $32,000 and $44,000: up to 50% of the benefits are taxable.
Test amount above $44,000: up to 85% of the benefits are taxable.

These thresholds are written into the statute and have never been adjusted for inflation.¹ For a married filer who lived with a spouse at any point in the year and files separately, the base amount is zero, and up to 85% of the benefits are taxable regardless of income.

Report the total gross benefits (US plus treaty-covered foreign, converted to dollars) on Line 6a, and the taxable portion from the worksheet on Line 6b.⁸

No Applicable Treaty: Report as Pension or Annuity

If no treaty applies, either because the US has no income tax treaty with the paying country or because the treaty has no social security article, the payment is taxed as pension or annuity income.³ The taxable amount is the gross distribution minus your cost basis, which is the after-tax contributions you personally made to the foreign system. There is no 50% or 85% inclusion cap.

Most foreign social security systems are funded through payroll taxes that function like pension contributions. If you can document the after-tax contributions you made while working abroad, subtract that basis from the total received; the excess is taxable as ordinary income. Without documentation, the full amount is taxable.

Because the IRS treats these payments as foreign pension distributions, they do not go on Lines 6a and 6b. You will not receive a Form SSA-1099 or Form 1099-R, and the Social Security Benefits Worksheet does not apply.³ The income is reported on the pension and annuity lines based on its character as described in IRS guidance.

Form 8833 When a Treaty Reduces or Eliminates the Tax

When a treaty fully exempts foreign social security from US tax, or otherwise modifies its treatment to reduce your US tax, disclose the position on Form 8833, Treaty-Based Return Position Disclosure, attached to your Form 1040.⁹ The form asks for the treaty, the article, and the nature of the income.

The penalty for failing to file Form 8833 when required is $1,000, and the IRS can disallow the treaty position entirely.¹⁰ Canada and Germany social security benefits are the recognized exception; no Form 8833 is required for those.⁵ For every other country, file the form.

If a treaty exempts the income and you file Form 8833, still report the income on your return and show zero as the taxable amount after applying the treaty. The exemption does not mean the income disappears from the return.

Converting the Payments to US Dollars

All amounts on a US tax return must be in US dollars. The general rule is to use the spot exchange rate on the date each payment was received. For monthly benefits, converting every deposit individually is tedious, and the IRS publishes yearly average exchange rates on its website; using the annual average is a reasonable approach for income received in regular installments.¹¹

The IRS does not mandate a single source. Federal Reserve rates, the IRS yearly average tables, and reputable commercial services are all acceptable. Consistency matters most. Pick one method and apply it uniformly to both the benefit income and any foreign tax withheld, and keep a record of the rates and their source in case the return is questioned.

Foreign Tax Credit for Withholding at the Source

If the foreign government withheld income tax from your social security payments, you can generally claim a Foreign Tax Credit on Form 1116 to avoid double taxation.¹² The alternative is deducting the foreign tax on Schedule A, but the credit is usually more valuable because it reduces tax dollar-for-dollar rather than reducing taxable income.

The credit is limited by the ratio of foreign-source income to total income, so it may not fully offset your US tax. Unused credit can be carried back one year or forward ten. If a treaty fully exempts the foreign social security from US tax and the source country also taxes it, the credit generally is not available, because there is no US tax on that income for the credit to offset.

The Account the Benefit Lands In May Trigger a Separate Filing

Where the benefit is deposited is a separate question from where it is reported on Form 1040, but it can create its own filing obligation. If your foreign social security is deposited into a bank account outside the United States, and the combined value of your foreign financial accounts exceeded $10,000 at any point during the year, you must file a Report of Foreign Bank and Financial Accounts (FBAR) through the FinCEN BSA E-Filing System.¹³ The FBAR is not part of the tax return. Its deadline is April 15 with an automatic extension to October 15. The $10,000 threshold is aggregated across all foreign accounts. Non-willful violation penalties can reach $10,000 per account per year.

Form 8938 under FATCA is a separate obligation for specified foreign financial assets above higher thresholds ($50,000 or $75,000 for single US-resident filers; $100,000 or $150,000 for joint US-resident filers; $200,000/$300,000 and $400,000/$600,000 for those living abroad). The right to receive foreign social security itself is not a specified foreign financial asset for Form 8938 purposes, but the bank account holding the payments can be.¹⁴

1
Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
2
Internal Revenue Service. Publication 915 (2025), Social Security and Equivalent Railroad Retirement Benefits
3
Internal Revenue Service. The Taxation of Foreign Pension and Annuity Distributions
4
U.S. Department of the Treasury. U.S. Model Income Tax Convention
5
Internal Revenue Service. Publication 519 (2025) – US Tax Guide for Aliens
6
Internal Revenue Service. United States-Canada Income Tax Convention
7
Internal Revenue Service. Protocol Amending the US-German Income Tax Treaty
8
Internal Revenue Service. Instructions for Form 1040 (2025)
9
Internal Revenue Service. About Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)
10
Internal Revenue Service. Form 8833 – Treaty-Based Return Position Disclosure
11
Internal Revenue Service. Yearly Average Currency Exchange Rates
12
Internal Revenue Service. Foreign Tax Credit
13
Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
14
Internal Revenue Service. Summary of FATCA Reporting for US Taxpayers