Maz

Hi guys

As some of you know, my USC hubby and I are planning on leaving the US in the next few months, just in time for Springtime in New Zealand. I just wondered if anyone knew if we would have any rights to the money we've paid into the Social Security system here, or if it's just sucked in to one big void.

I'm cashing out my private pension and 401K - this is it, no going back! We're going to use the money to put down on a house in NZ. Yeah we'll have to pay about 10% more for the early withdrawal penalties, but I'd rather lose that money now, than pay it in mortgage interest later.

Anyway, am curious about the SS issue if anyone has any ideas on this. We'll certainly have fun filing our taxes next year!

mdyoung

As a U.S. citizen he's fine living in New Zealand

Your Payments While You Are Outside The United States:

http://www.ssa.gov/pubs/10137.html

If you are a citizen of New Zealand you are screwed unless you come back to the U.S. every 6 months once eligible and stay for a month.

RS 00204.030 Lawful Presence for an Entire Month - Beneficiary is Outside the U.S.:

https://s044a90.ssa.gov/apps10/poms.nsf/lnx/0300204030

RS 02610.001 Alien Nonpayment Provisions:

https://s044a90.ssa.gov/apps10/poms.nsf/lnx/0302610001

RS 02610.015 Status of Countries for Applying Exceptions Based on Citizenship:

https://s044a90.ssa.gov/apps10/poms.nsf/lnx/0302610015

Maz

Super, thanks for all those links! What if we take NZ citizenship (very likely once we're eligible) but just don't tell the US Authorities?...

penguinsix

If this is your plan you need to read up HEAVILY on renunciation of your US citizenship status, and the effect it has on your tax liability (you'll be suprised). It is never as simple as it sounds.

And you may want to thoroughly examine the mortgage interest vs. 10% withdrawl penalty. You'll want to consult an accountant with cross border capacity to see if the mortgage interest you pay in NZ is deductible in the US as mortgage interest (I believe it is, but you'll need to check). As your USC husband is going to be filing US taxes for some time to come (possibly even AFTER he renounces citizenship) the deduction for mortgage interest (often stacked in the first years) might be more of a savings than the 10% penalty or whatever it is (10% + tax on the money as income at your current rate) vs. (mortgage interest deduction + tax on 401k money at a later/retiredment date when your rate is lower -- or may after you have abandoned your citizenship).

Like I said, it's pretty complicated. I'm afraid I can't offer a specific answer other than to find a good US-NZ accountant and go through the different scenarios.

Good luck.

Maz

Sorry if what I said muddled things. We're not intending on renouncing our US citizenship. We're just leaving the country for good and taking our money with us.

penguinsix

Oh, ok. I assume you know never 'leave' in the eyes of the IRS--they hunt you down wherever you are. Bastages...

Anyway, I hope you do find a good accountant who can run through the different scenarios. There might be a way to save some more cash and get your new start off to a good start.

Maz

Too true!

That would definitely be nice! Thanks for the advice, penguinsix.

mdyoung

GN 00303.200 Loss of U.S. Citizenship or Nationality
https://s044a90.ssa.gov/apps10/poms.nsf/lnx/0200303200

B. PROCEDURE- QUESTIONABLE DUAL CITIZENSHIP

If an event has occurred which could result in the claimant's loss of U.S. citizenship and such loss would be material to the claim, follow the procedure indicated below.

NOTE: Because each country establishes criteria for citizenship independently, it is possible for a person to be officially recognized as a citizen of the U.S. and another country at the same time. A person does not automatically lose his/her U.S. citizenship if he/she is considered a citizen of another country.