Social Security benefits for child in Spain with non-citizen parent - 30% tax withholding refundable?

The 30% withholding isn't a 'penalty' - it's the standard nonresident alien tax withholding rate. Depending on the tax treaty between the US and Spain, your friend's daughter might qualify for a reduced rate or be eligible for a refund by filing a US tax return (Form 1040NR). Spain has a tax treaty with the US, so she should definitely look into this. Regarding the online account - the mother won't be able to create her own my Social Security account without an SSN. However, she can become a Representative Payee and manage her daughter's benefits that way. She should contact the Federal Benefits Unit that serves Spain (I believe it's in Madrid) to set this up properly.

the 30% is standard for foreigners, but you can get it back!! I live in portugal (hi neighbor!) and my kids get SS benefits through their american father. we file 1040NR every year and get most of that withholding returned. the key is that tax treaty between spain and US, it matters alot!!

My sister went through something similar with her kids in Germany. The SSA withholds that 30% automatically from beneficiaries outside the US. It's not a penalty, just their standard practice for international payments.

Have you tried calling SSA directly to ask about these questions? I know international calls can be tricky but they're the ones who can give you definitive answers about the mother's ability to manage the account and the tax withholding situation.

Thanks everyone for your helpful responses! I'm relieved to hear the 30% might be refundable through the tax treaty. I'll definitely help my friend look into filing Form 1040NR for her daughter. I'll also suggest she contact the Federal Benefits Unit in Madrid about becoming an official Representative Payee, though I'm a bit worried about the response time based on some of your experiences. One more question - does anyone know if her daughter will need to file US tax returns every year she receives these benefits? She's only 8 now, so we're trying to understand the long-term obligations.

Some important points your friend should know: 1. There's a specific form for tax treaty benefits - Form 8833 (Treaty-Based Return Position Disclosure). This should be included with the 1040NR to claim reduced taxation under the US-Spain tax treaty. 2. As Representative Payee, her mother has strict responsibilities for managing and reporting how the benefits are used. The money must be used for the child's needs and annual reports are required. 3. The FBU in Madrid handles these cases regularly - they have specific procedures for non-US citizen parents managing benefits for their children abroad. 4. Benefits for children usually continue until age 18, or 19 if still in secondary school. This isn't just until age 16 as you mentioned in your original post. 5. Make sure all address information is kept current with SSA to avoid payment interruptions.

I'm so ANGRY about that 30% tax!!! My kids lost thousands in benefits because I didn't know we could file for refunds!!! Nobody at SSA told us this was even an option. By the time I found out it was too late to claim for previous years. Tell your friend not to wait to file those tax forms!!!!!

btw the father being helpful is actually important!! we needed my ex husband to verify some info with SSA a few times. make sure your friend stays on good terms with him for the kids benefit stuff, it makes everything SO much easier!!

Just curious - does the daughter have citizenship in both US and Spain? That might affect some of the tax treaty provisions. My niece has dual citizenship and it made the process a bit different than for her sister who only has German citizenship.

Regarding citizenship - for Social Security benefits purposes, citizenship is less important than residency status. Since the daughter is residing in Spain and is not a US citizen, she's treated as a nonresident alien under US tax law, subject to the treaty provisions between the US and Spain. One other important point about the Representative Payee situation - since the mother is a non-US citizen living abroad, SSA might require additional verification and documentation. This could include more frequent Representative Payee accounting reports. She should ask the FBU specifically about any special requirements for her situation. Also, make sure your friend keeps all documentation of how the benefits are spent on behalf of her daughter. Foreign Representative Payees sometimes face additional scrutiny.

A dedicated bank account is definitely a good idea! Representative Payees are actually required to keep Social Security funds separate from their own money. The account should be titled in a way that shows the child owns the money but the mother manages it - something like "Maria Rodriguez, representative payee for Sofia Rodriguez, beneficiary." This makes it much easier to track how funds are spent and complete the annual Representative Payee Report. It also helps prevent any appearance of misuse of funds, which can be especially important in international cases where there might be more scrutiny.