Jos Fosdyke

I'm a UK-resident UK citizen without a US bank account, about to start receiving US SSA retirement benefit payments. My question is about the mechanics of payment. I believe I have the choice of having them directly deposited into my UK bank account in GBP, or paid into my Wise multi-currency account in USD. The Wise account looks like a normal US bank account to US payers. Does anyone have experience or thoughts on these options, and which might be preferable?

1) Wise multi-currency account. The advantages I see for this approach are:
a) gives me some USD without any conversions costs, useful for holidays in the US and such like;
b) lets me choose the time (and hence the rate) when it gets converted to GBP rather than being stuck with the rate on payment day.

2) Direct deposit to the UK in GBP. About the only advantage I can see for this is that it makes it a bit easier to calculate the sum for the UK tax return.

First off, can anyone confirm that the SSA will pay into Wise multi-currency accounts? Although it presents like a normal US dollar bank account, I've had at least one company refuse to pay into it (and wouldn't say why). Anybody got experience or thoughts on these two methods? Does the GBP direct deposit really use the live mid-market conversion rate without any modification to cover their costs? Are there other options I haven't thought of?

Are there any restrictions on the names on the payment account? For example, could my wife's payments go into a Wise account in my name (different surname)?

Thanks for any experience or thoughts anyone can offer.

durham_lad

Although my wife and I have Wise USD accounts linked to our Vanguard accounts but we choose to have our SS payments go direct into our UK bank account. You can’t beat the exchange rate on the day, even with Wise, and it hits our account like clockwork every month.

Jos Fosdyke

Thanks for that. Have you ever checked up on the conversion rate you received for a transfer to see how it compares with the mid-market rate at that time? I wouldn't expect them to rip you off, but I'd be surprised if there weren't a small slice taken just to cover the costs - it's not obvious to me why the SSA would pay the costs of conversion. There'd be a small fee with Wise with the actual conversion done at the mid rate. I see that payment to a GBP account is more convenient if you actually want it in GBP.

durham_lad

Every month I record the amount received on a spreadsheet which calculates the exchange rate as USD paid divided by GBP received. I need to sum up the monthly amounts for tax reporting anyway so an extra column on the spreadsheet is easy. Sometimes I check what I can get if it had gone through Wise which would be the alternative if I had it paid into a US bank account and then transferred, and it is always better to have SS pay in GBP.

The last payment was June 2nd and the rate was 0.807 and the payment before was May 4th with a rate of 0.801. If you have a way of finding the mid market rates on those days I would be interested in knowing.

Jos Fosdyke

Thanks, that's very interesting. I'm no expert in exchange rates, but I usually use https://www.investing.com/currencies...istorical-data for previous rates. I'm not sure what times or timezones they use for 'open' and 'close' though, but they show the range for the day. For your two examples, the rates you got are better than the market range on those days but both within the range for two days earlier. It's too little data to have any certainty, but I'm guessing they do the conversion a day or two before the deposit - it's hard to imagine that they give better than the market rate. It would need a lot more examples to see if there's any clear pattern. Whatever they're doing, it looks like any rate fiddling to cover costs is very small if any at all.

My wife and I will be claiming at the same time. I'm minded to have one paid in USD and the other in GBP. That gives the advantage of having some USD available and letting me wait for better exchange, while not missing out entirely if the direct deposit rate is better overall. I believe I can always change later if one approach proves definitely better than the other.

Thanks for the information.

durham_lad

Good plan. I also have US private pensions, which I have paid into a US bank account for much the same reason.

Mummy in the foothills

So I'm probably going off topic a little here, but. My husband and myself are getting ready to retire and get our US SSA I'll now get it paid in £ to our UK bank (thank you for that) but now what happens about tax.
Do we have to do UK taxes and declare our SSA and pay tax in UK on it?
We are doing US taxes annually as usual.

durham_lad

while resident in the UK SSA is taxed by the UK and not taxed in the USA. When we file our US taxes SS is shown on the 1040 but the taxable amount is zero.

Mummy in the foothills

So now we get to learn about self filing here and doing US too, I'm going to need help from my kids on this one!

Jos Fosdyke

The UK/US tax agreement makes regular payments from US pensions (including SSA retrement benefits) taxable in the UK but not taxable in the US for UK residents. You'll need to do UK tax returns and report the income as a foreign pension. I think you declare it as non-taxable on the US tax returns specifying the relevant tax agreement.