Q. While in the Army stationed in western Germany, I met and later married my wife, a German citizen. We were married in December 1974. She accompanied me to the U.S. in July 1977 with permanent resident status. She worked in the U.S. and the income was reported to the IRS on our joint return. In 1979, we returned to Germany where she worked for the military PX and the commissary and was paid in local currency as a German. This was done in accordance to the Host Nation agreements in place. She did not receive a W2 from either the PX or the commissary, but did pay income tax to the German government.
As far as I know, the Defense Department and the Army Air Force Exchange System (AAFES) had this arrangement with the German government under what was called the Status of Forces Agreement.
She was paid in Deutsch marks and we have no idea of the amounts, the conversion rates at the time, or how much tax was paid to the German government. I am sure the income was not very high and want to know how to get an exception to her having to suffer under the windfall elimination provision. The period of time where she worked was from 1980 through 1990. She has worked (by my count) 22 years under Social Security.
Can you provide us with any information that we can use to avoid this penalty? Her retirement from her work in Germany is only around $400 per month.
A. While there are exceptions to the windfall elimination provision — see www.socialsecurity.gov/pubs/10045.html — none of them would apply to your situation. As a result, there is no way to avoid the penalty.