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Receiving USA Social Security payments

Receiving USA Social Security payments

Old Dec 4th 2016, 11:19 am
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Default Receiving USA Social Security payments

I am a UK citizen and US green card holder now living full time in the UK. I have worked in the USA and later in France for the same company and have approx. sixteen years of USA SS contributions. I am now 62 years old and entitled to claim US soicial security payments. I am working part-time in the UK and also recieve a French pension. My question is will the US SS entitlement be reduced because of my other earnings, or is it paid in full and then subject to UK tax ?
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Old Dec 4th 2016, 11:45 am
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Default Re: Receiving USA Social Security payments

US social security is reduced because of other pensions received that were paid for with income that was not subject to US social security taxes. The process is call the "windfall elimination provision (WEP), and has been discussed at some length in this thread in the US forum. The thread was started several years ago, so I'd start by reading the more recent pages.

WEP works on a sliding scale, with the largest deductions made for someone who contributed to Social Security for the fewest number of years, and no deductions at all once you reach 30 years of "substantial contributions" to Social Security.

Last edited by Pulaski; Dec 4th 2016 at 11:48 am.
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Old Dec 4th 2016, 12:23 pm
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Default Re: Receiving USA Social Security payments

OK thanks I will check the thread. It does not seem right to me that there would be deductions made by the USA. If I have paid into a scheme I should expect to receive the entitlement regardless of whether I have also paid into a different scheme in a different country. I understand why the UK would tax me on payments from any country repatriated into the UK, but not the USA reducing my entitlement ?
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Old Dec 4th 2016, 12:37 pm
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Default Re: Receiving USA Social Security payments

The reason for the reduction of US Social Security payments is because it is much more generous to those who retire from very low paid jobs, and relatively generous to those who retire from modestly paid jobs. If your pay is very low then SS is paid to cover 90% of your pre-retirement income!

The WEP process is designed to differentiate between those who have low SS payments because they were poorly paid and those who have low SS payments because they had other employment and other pensions.

The background is that in the US most local government employees do not pay into the general Social Security system, there are other funds, both state and federal, that pay pensions for government workers. WEP was designed to stop someone who's career was split between government jobs and private sector employment from being paid pensions from both the government pension fund and Social Security as if they were poor and on low income.
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Old Dec 4th 2016, 2:57 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by peaenjay View Post
I am a UK citizen and US green card holder now living full time in the UK. I have worked in the USA and later in France for the same company and have approx. sixteen years of USA SS contributions. I am now 62 years old and entitled to claim US soicial security payments. I am working part-time in the UK and also recieve a French pension. My question is will the US SS entitlement be reduced because of my other earnings, or is it paid in full and then subject to UK tax ?
As Pulaski has said, since you only have 16 years of SSA contributions in the US, your US SS payment will be reduced by WEP. Any French pensions (including CNAV) and any UK pensions (from your part time work plus UK State Pension) will all be included in the WEP calculation.

While not meaning to take this thread into another direction, I have a few questions.

I have work experience similar to yours (US, UK, and France) and am now retired in the UK. My US SS payment was reduced roughly 30%+ thanks to WEP.

My question: Do you really still have a Green Card? Sixteen years of contributions would indicate that you were an LTR in the US. Is that correct? If you still have a Green Card, can I assume you never completed form 8854 for the IRS? If that's true, may I ask how you treat the French pension payments on your US tax return? Do you claim the French pension as French source, or do you claim the UK/France treaty and claim the French pension income as UK source?

My apologies for being so inquisitive, but it's something I had to struggle with in the beginning. Just curious as to how others have handled this.
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Old Dec 4th 2016, 3:08 pm
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Default Re: Receiving USA Social Security payments

As others have pointed out, WEP reduces US SS if you have less than 30 years of FICA payments and pensions from non-FICA wages.

The bigger issue is your claim to be resident in the UK and still holding a green card. If you still have a green card and haven't filed an 8833 to claim NRA status then the IRS will consider you US resident for tax purposes and tax your worldwide income, including US SS. Claiming NRA status might affect your green card status.

Last edited by nun; Dec 4th 2016 at 3:43 pm.
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Old Dec 4th 2016, 4:09 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by theOAP View Post
As Pulaski has said, since you only have 16 years of SSA contributions in the US, your US SS payment will be reduced by WEP. Any French pensions (including CNAV) and any UK pensions (from your part time work plus UK State Pension) will all be included in the WEP calculation.

While not meaning to take this thread into another direction, I have a few questions.

I have work experience similar to yours (US, UK, and France) and am now retired in the UK. My US SS payment was reduced roughly 30%+ thanks to WEP.

My question: Do you really still have a Green Card? Sixteen years of contributions would indicate that you were an LTR in the US. Is that correct? If you still have a Green Card, can I assume you never completed form 8854 for the IRS? If that's true, may I ask how you treat the French pension payments on your US tax return? Do you claim the French pension as French source, or do you claim the UK/France treaty and claim the French pension income as UK source?

My apologies for being so inquisitive, but it's something I had to struggle with in the beginning. Just curious as to how others have handled this.



Thanks for the helpful comments.

After living in the USA I was an ex-pat for the company in France and continued contributing to the US SS. This is complicated so I have just engaged an accountant to help me with the tax implications. It seems likely that I will use the UK treaty with the USA and include the French pension in my UK earnings. Is that what you did ?
I will also probably revoke my green card since I no longer have a need for it and do not want the burden of US tax returns for the rest of my life.
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Old Dec 4th 2016, 4:18 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by Pulaski View Post
The reason for the reduction of US Social Security payments is because it is much more generous to those who retire from very low paid jobs, and relatively generous to those who retire from modestly paid jobs. If your pay is very low then SS is paid to cover 90% of your pre-retirement income!

The WEP process is designed to differentiate between those who have low SS payments because they were poorly paid and those who have low SS payments because they had other employment and other pensions.

The background is that in the US most local government employees do not pay into the general Social Security system, there are other funds, both state and federal, that pay pensions for government workers. WEP was designed to stop someone who's career was split between government jobs and private sector employment from being paid pensions from both the government pension fund and Social Security as if they were poor and on low income.
How much would SS be reduced for receiving a UK pension ? For example if UK state pension 100 per week, after calculating the windfall provision how much might be left over ?
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Old Dec 4th 2016, 4:32 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by morpeth View Post
How much would SS be reduced for receiving a UK pension ? For example if UK state pension 100 per week, after calculating the windfall provision how much might be left over ?
How much is your US SS entitlement?

It could be 50% of the SS amount, or 1% of the SS amount.
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Old Dec 4th 2016, 4:40 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by morpeth View Post
How much would SS be reduced for receiving a UK pension ? For example if UK state pension 100 per week, after calculating the windfall provision how much might be left over ?
Sorry, the EDIT function isn't working for me for some reason.

Last sentence of post #9 should read:

It could be 50% of the SS amount, or 1% of the SS amount, or anywhere in between.

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Old Dec 4th 2016, 4:43 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by theOAP View Post
Sorry, the EDIT function isn't working for me for some reason.

Last sentence of post #9 should read:

It could be 50% of the SS amount, or 1% of the SS amount, or anywhere in between.

Perhaps I phrased my question poorly. If one receives say $500 a month from a UK pension, and receiving social security ( I am not currently but deciding how many more contributions to make to UK pension), how much is the SS reduced by for the $500 per month received form UK ?

Based on your answer of between 1% and 50%, what is criteria ?
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Old Dec 4th 2016, 5:15 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by morpeth View Post
Perhaps I phrased my question poorly. If one receives say $500 a month from a UK pension, and receiving social security ( I am not currently but deciding how many more contributions to make to UK pension), how much is the SS reduced by for the $500 per month received form UK ?

Based on your answer of between 1% and 50%, what is criteria ?
It depends on how many years of SS contributions you made - the more years of SS contributions you made, the less the WEP deduction. If you made 30+ years of SS contributions then WEP is zero, and I think it is only a small percentage (of the foreign or goverment pension) if you have made 25-30 years of SS contributions. Maximum WEP is 50% of the foreign or goverment pension.
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Old Dec 4th 2016, 8:05 pm
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Default Re: Receiving USA Social Security payments

If circumstances change such as giving up work, does the US payment get revised or is it fixed forever ?
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Old Dec 4th 2016, 8:13 pm
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Default Re: Receiving USA Social Security payments

Originally Posted by peaenjay View Post
If circumstances change such as giving up work, does the US payment get revised or is it fixed forever ?
WEP is fixed forever (unless you later receive another reportable non-US pension) on the date you report the foreign income, if that is what you are asking. So if you can time the commencement date of reportable non-US pension then bear in mind the implications of the exchange rate at that time.

Last edited by J.JsOH; Dec 4th 2016 at 8:26 pm.
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Old Dec 4th 2016, 8:29 pm
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Default Re: Receiving USA Social Security payments

Can I please ask a question similar to the original posted.....I too am a permanent resident but recently was divorced from my USC spouse. I understand that I will be eligible for 50% of his Social Security payment due to the length of marriage (19 years) and the fact that I was a stay-at-home mum for 17 years. Does anyone know if WEP will apply, there has been more than 30 years of SS payments made.

Many thanks
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