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Very little finances to move back with

Very little finances to move back with

Old Jul 29th 2020, 8:13 pm
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Default Very little finances to move back with

Hi everyone, I found this forum about two years ago when my American husband agreed that when he retires he thinks it would be a good idea for us to go back to my country….the UK. I always knew there may be a possibility in the future but now we are quite, quite sure after many, many discussions that it will happen, one way or another.

I was 52 (now 62) when I came on a marriage visa. I have never settled even though I have tried, we both realized that although I made every effort to be sure I was making the right decision ie 3 times I came and lived with him, for, 3 months at a time. We had found each other later in life and were in love and although everything was very different to what I was used to, I thought I would adapt…..how wrong I could have been!!!!!!

I am now suffering quite badly with anxiety and depression, which has gotten worse over the last few months knowing how difficult it is going to be if my dad is taken into hospice or worse passes while this pandemic continues., (he has cancer). I got back to the US on the 20th March after visiting my dad other family and friends……quite honestly I wish I had stayed. Well I didn’t and I I know deep down that the situation with my dad is really out of my control.

However, what isn’t out of my control is researching what we need and have to do to both be in the UK one day soon, a max of 2 years I would say (he can retire next year ). We are very aware of the financial requirements, NHS medical insurance for him etc.

If you have got this far into my post, I thank you for listening to me and hope you can contribute something, anything that might/could help

Are we being delusional thinking that if we were to go 2 years from now, with $41,000 per yr US Social Security for 2 years and then when I’m 66 with my UK pension it would rise to approx $52,000. No need to go into details as why, unfortunately we know this is not a lot but that is the reality. We only have about $100,000 in savings and no home to sell? Of course this is all based on today’s exchange rate, which we know could easily change.

Also, the other thing we are confused about is taxes. Does anyone know, do we have to pay both US and UK tax, how does it work when you have so little?
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Old Jul 29th 2020, 8:32 pm
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Default Re: Very little finances to move back with

If you're planning and budgeting to live in the UK you really should work your figues in GBP, but at the moment, approximating on your USD figures, you'll have £32,000/yr two years fom now and £40,000 four years from now. Actually, compared to most people reaching retirement age, that isn't actually too bad, though obviously you'll need to pay rent out of that if you don't have the resources to buy a home. On the plus side, apart from your husband's NHS access fee, the cost of healthcare in the UK is potentially negligible.

One thing to watch out for is what happens if GBP recovers, back to its average value over the past 35 or so years i.e. around $1.6 = £1. That would turn your £32,000 from the US into around £25,000, and if the pound went back towards $2, that could cut the value of $41,000 to only around £20,000! Under the circumstances you describe I would budget for around £25,000 from the US, and save the extra as a hedge against GBP recovering i.e. to draw on if money coming from the US drops below £25,000.

You will need to choose the right area to live - do you have any thoughts about where in the UK you will be looking to live? Places like the north of England, or even Scotland are often popular with eople looking to keep their housinfg costs down; other areas include areas such as East Anglia, Wales or the South West of England, so basically areas that are too remote to commute into London or other major cities.

If you are certain that you will be going to live in the UK, you should consider sending at least part, if not most of your $100k savings to the UK in the near future, to take advantage of the favourable USD/GBP exchange rate. To anyone who says "wait, sterling may fall further", I would ask "You're just proposing speculating on currency - if someone told you that holding Tanzanian shillings was a sure fire way to increase your capital, would you sell USD to buy shillings?" I hope that the answer to that is a very obvious "no", and equally continuing to hold USD hoping to make a gain is equally pointless gambling on future exchange rates.

Last edited by Pulaski; Jul 29th 2020 at 8:39 pm.
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Old Jul 29th 2020, 10:47 pm
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Default Re: Very little finances to move back with

Have you considered topping up your NI contributions to maximize your Uk pension? May be worth considering, particularly if you qualify for Class 2 contributions.
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Old Jul 30th 2020, 12:17 am
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Default Re: Very little finances to move back with

Links for the state pension advice mentioned above:
https://www.gov.uk/check-state-pension
https://www.gov.uk/pay-voluntary-cla...onal-insurance
https://www.gov.uk/voluntary-nationa...ibutions/rates
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Old Jul 30th 2020, 12:06 pm
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Default Re: Very little finances to move back with

Even if exchange rates go back down to historic levels I doubt that will happen within 2 years but who knows. If your US income does drop to £25k in 2 years you will then have your UK OAP (£8k?) which will keep you above £30k/year. Depends where you live on how well £30k/year will support you. Our son lives a few blocks from us in N. Yorkshire and manages very nicely on ~£24k/year.

As for taxes then if you are not a US citizen it is only your husband who will have to file US taxes and the tax treaty between the US and UK means that his SS is not taxed in the USA, just in the UK, so if that is his only source of income he won't be taxed at all by the USA but he will have to file a tax return to show no tax on his SS, and also file an FBAR each year if he has signatory authority over foreign accounts totalling $10k.

If you can make more voluntary NI contributions then I would definitely do it as you are so close to receiving OAP. I would also take the opportunity and move some $s to £s now while the exchange rate is so good.

Last edited by durham_lad; Jul 30th 2020 at 12:55 pm.
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Old Jul 31st 2020, 7:03 pm
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Default Re: Very little finances to move back with

Thank you Pulaski for your reply, it was very encouraging. We have thought long and hard about what might happen if the pound recovers and how it could affect our only source of income. Honestly though, we think by the time we have had Medicare deducted, the supplement needed and then possible medical bills that we could still incur, we probably won't any worse off. If we undecided before, we are now 100% positive. Again thank you.
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Old Jul 31st 2020, 7:07 pm
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Default Re: Very little finances to move back with

Twitcher1958, I already know I have maximum UK pension.
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Old Jul 31st 2020, 7:15 pm
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Default Re: Very little finances to move back with

Durham lad, my predicted UK pension is the max so just over 9,000. N. Yorkshire is actually somewhere we have been considering due to our situation. As for the taxes I am a dual citizen, does that make difference? Thanks for the info
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Old Jul 31st 2020, 7:27 pm
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Default Re: Very little finances to move back with

Originally Posted by Goinghome70 View Post
Durham lad, my predicted UK pension is the max so just over 9,000. N. Yorkshire is actually somewhere we have been considering due to our situation. As for the taxes I am a dual citizen, does that make difference? Thanks for the info
As a dual citizen you are also subject to US taxes on your worldwide income including OAP. My wife and I are both dual citizens and use foreign tax credits to reduce our US taxes.
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Old Aug 1st 2020, 10:52 am
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Default Re: Very little finances to move back with

Hi Goinghome70, Please do not consider South west England as Pulaski suggests.I am from the south coast & have lived in various counties there over the years.I lived in the Torquay/Paignton area & in the city of Exeter.Both places are lovely but certainly not cheap.And Cornwall I believe is the same.Don't know about Somerset but Dorset,Hampshire & Sussex where I have lived are very pricey.I have had both businesses & houses there but it would be out of my price range now.So sorry about your family concerns & do hope things will work out for you soon.
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Old Aug 3rd 2020, 5:58 pm
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Default Re: Very little finances to move back with

Thank you dougal03. I guess I know where we could afford and not afford and yes you are right.
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Old Aug 3rd 2020, 6:00 pm
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Default Re: Very little finances to move back with

durham lad, really! How could we afford to live if we were paying 2 lots of taxes on the little we have???????
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Old Aug 3rd 2020, 6:10 pm
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Default Re: Very little finances to move back with

Originally Posted by Goinghome70 View Post
durham lad, really! How could we afford to live if we were paying 2 lots of taxes on the little we have???????
As I said in my post above you get foreign tax credits to reduce your US taxes by the amount of taxes you pay to HMRC. Since HMRC taxes are usually higher then your US taxes owed go down to zero. As a USC you’ll have to file a US tax return no matter where you live. On the return you see the US taxes assessed, then the foreign tax credit applied and the bottom line is the tax owed. The US is the only major country in the world to have citizenship based taxation.

Last edited by durham_lad; Aug 3rd 2020 at 6:13 pm.
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Old Aug 3rd 2020, 6:19 pm
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Default Re: Very little finances to move back with

Originally Posted by durham_lad View Post
As I said in my post above you get foreign tax credits to reduce your US taxes by the amount of taxes you pay to HMRC. ....
If I might clarify for Goinghome70, "tax credit" means when one country tries to bill you for taxes you tell them "I have already paid this much in taxes on that money".

For example if your tax bill in the UK is £100 ($125) and your tax bill in the US is $100, then, as Durham Lad said, you would owe nothing in the US because you have already paid more in the UK than the US is trying to bill you for.

Hypothetically if your tax bill in the UK is £80 ($100) and your tax bill in the US is $110, then you would pay Uncle Sam $10, because you have a "tax credit" for $100 for taxes already paid in the UK.

Last edited by Pulaski; Aug 3rd 2020 at 6:41 pm.
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Old Aug 3rd 2020, 6:26 pm
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Default Re: Very little finances to move back with

Originally Posted by Pulaski View Post
If I might clarify for Goinghome70, "tax credit" means when one country tries to bill you for taxes you tell them "I have already paid this much in taxes on that money".

For example if your tax bill in the UK is £100 ($125) and your tax bill in the US is $100, then, as Durham Lad said, you would owe nothing in the US because you have lready aid more in the UK than the US is trying to bill you for.

Hypothetically if your tax bill in the UK is £80 ($100) and your tax bill in the US is $110, then you would pay Uncle Sam $10, because you have a "tax credit" for $100 for taxes already paid in the UK.
Exactly. To clarify further it is like for like. Since SS is only taxed in the U.K. then you can’t use those taxes as credits against taxes paid on other US income. For example. A US government pension is only taxed in the US so you can’t use the taxes you paid in the U.K. on SS against the taxes paid in the US on the government pension.
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