Obtaining a social security card for a child born abroad has become greatly difficult, and has major tax implications.
In a LinkedIn post, I wrote about the great difficulty US citizens in Israel are having with regard to CRBA (Certificate of Birth Abroad) and passport appointments for newborns. This has gotten much attention in the media recently.
Obtaining a social security card for a newborn is another major issue. Normally, after a baby is born abroad, the parents apply for a CRBA, passport and social security card at the same time.
While babies born in the US have a social security card automatically mailed to the parents within a few weeks, after the social security administration is notified by the hospital, for newborns abroad, this is a manual process.
The fact that CRBA and passport appointments are almost impossible to obtain has resulted in the impossibility of getting a social security card, as well. A CRBA and passport (or an application being submitted at the same time) is required in order to apply for a social security card.
Recently, the embassy in Israel has not allowed social security applications at the same time, on a sporadic basis. This causes the parents to have to come back for a social security appointment, which is almost impossible to obtain, as well.
While the embassy has offered to have the parents leave the original passports and CRBA in a drop box for processing, along with the SS application, parents fear that they will be lost and not returned, or returned after many months.
Not only that, but when an SS application is actually given in, it can take around 10 months for the embassy to give it over to the SSA for processing. About 50% of these applications get lost, according to a reliable source.
The parents will once again have to make an impossible to obtain appointment at the embassy of consulate, or risk using a drop box and getting their passports, and the coveted CRBA, returned at an unknown time.
In many cases, this causes the parents not to be able to take the child as a dependent on their tax return for the year.
Due to former President Obama's PATH act of 2015, the social security number must have been issued before the due date (or extension) of the return in order to list that dependent on the return.
This can cause parents much unnecessary tax, or a missed refund. Especially in the case of Israel, which has no totalization agreement with the US for self employed individuals, the bite of double taxation can't be minimized by tax credits for children if no social security number was issued.
For about every $10,000 of self employed profit, there is $1,500 tax. Each child can provide a credit of $1,500 for self employment tax.
Conversely, a wage earner can receive a payment of $1,500 per child for the child tax credit, based on income. Another $500 can be used as a credit on tax.
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