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Paying (want to) US Social Security - US Employer in UK

Paying (want to) US Social Security - US Employer in UK

Old Jan 25th 2024, 1:43 am
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Default Paying (want to) US Social Security - US Employer in UK

Hi everyone,

I have been living in the US for years and have dual UK/US citizenship. I am excited to return to the UK for a while to live and work. Hopefully I will be transferring with my American employer (W-2) to their UK office.

I understand I will have to pay UK taxes because I will be resident, I will also have to file US taxes, and that there is a US-UK treaty to avoid paying double taxes.

I've read that if working overseas (i.e., out of the US) for an American employer then paying US social security tax is still required; however, almost all websites then give information about how to avoid double taxation. I would like to continue contributing to the US social security when working in the UK. Is that possible and does that mean paying full US income tax (not a good idea if paying UK income tax, too) or just the US social security tax part?

Thank you
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Old Jan 25th 2024, 3:01 am
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Default Re: Paying (want to) US Social Security - US Employer in UK

If being transferred for less than 5 years then you pay US Social Security in lieu of UK National Insurance. https://www.ssa.gov/pubs/EN-05-10180.pdf. You will pay income tax to the UK on your earnings but as you are aware will have to file with the IRS as well, and if the tax due in the US is more than that due to the UK you will have to pay the difference.
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Old Jan 25th 2024, 2:37 pm
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Default Re: Paying (want to) US Social Security - US Employer in UK

Originally Posted by EarthlingHatchedInUK
Hi everyone,

I have been living in the US for years and have dual UK/US citizenship. I am excited to return to the UK for a while to live and work. Hopefully I will be transferring with my American employer (W-2) to their UK office.

I understand I will have to pay UK taxes because I will be resident, I will also have to file US taxes, and that there is a US-UK treaty to avoid paying double taxes.

I've read that if working overseas (i.e., out of the US) for an American employer then paying US social security tax is still required; however, almost all websites then give information about how to avoid double taxation. I would like to continue contributing to the US social security when working in the UK. Is that possible and does that mean paying full US income tax (not a good idea if paying UK income tax, too) or just the US social security tax part?

Thank you
do they not have a a UK entity to PAYE you? Seems very messy to W2 you in the UK and lots of issues….

you may want to look at this:
https://www.irs.gov/individuals/inte...come-exclusion

although the terms may limit travel to the US:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.”


and also understand the DTA, it is for federal tax and UK income tax… not state or city and not social security…

I commuted from the US to the UK for a couple of years.. as an LPR I filed and paid tax’s and SS/NI both sides of the pond… it can get expensive if you live somewhere like NYC where you have lots of local taxes (which UK taxes paid do not credit against)… so you may want to make sure you are not resident in any US state with high taxes….


Last edited by tht; Jan 25th 2024 at 2:40 pm.
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Old Jan 25th 2024, 7:31 pm
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Default Re: Paying (want to) US Social Security - US Employer in UK

Originally Posted by Glasgow Girl
If being transferred for less than 5 years then you pay US Social Security in lieu of UK National Insurance. <url>. You will pay income tax to the UK on your earnings but as you are aware will have to file with the IRS as well, and if the tax due in the US is more than that due to the UK you will have to pay the difference.
Thank you for this link. Right now I am contributing to both SS and NI, which I want to continue to do. It seems I will be required to pay SS for 5 years and hopefully I can continue to pay voluntary contributions for NI.

Last edited by EarthlingHatchedInUK; Jan 25th 2024 at 7:54 pm.
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Old Jan 25th 2024, 7:43 pm
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Default Re: Paying (want to) US Social Security - US Employer in UK

Originally Posted by tht
do they not have a a UK entity to PAYE you? Seems very messy to W2 you in the UK and lots of issues….

you may want to look at this:
https://www.irs.gov/individuals/inte...come-exclusion

although the terms may limit travel to the US:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.”


and also understand the DTA, it is for federal tax and UK income tax… not state or city and not social security…

I commuted from the US to the UK for a couple of years.. as an LPR I filed and paid tax’s and SS/NI both sides of the pond… it can get expensive if you live somewhere like NYC where you have lots of local taxes (which UK taxes paid do not credit against)… so you may want to make sure you are not resident in any US state with high taxes….
Thank you for this info. I wasn't clear - I am currently on a W-2. I assume I will be hired into the UK office. Now I am wondering if the company has a UK-registered company (branch) because of tax complications.

Great point about state taxes - not excluded from the dual tax. Yikes! I am currently paying CA state taxes. If I am not residing in the US for a while (prob. ~2 years) then what determines the US state I am "resident in"? Seems Nevada (PO box) would be the obvious choice or am I missing something?

"I filed and paid tax’s and SS/NI both sides of the pond" - were you able to get tax paid back because of the dual agreement but also pay into both SS/NI? That's my main concern - I want to keep contributing to both SS and NI but not pay double tax other than that (excluding US state now).

Last edited by EarthlingHatchedInUK; Jan 25th 2024 at 7:50 pm.
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Old Jan 25th 2024, 8:40 pm
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Default Re: Paying (want to) US Social Security - US Employer in UK

Originally Posted by EarthlingHatchedInUK
Thank you for this info. I wasn't clear - I am currently on a W-2. I assume I will be hired into the UK office. Now I am wondering if the company has a UK-registered company (branch) because of tax complications.

Great point about state taxes - not excluded from the dual tax. Yikes! I am currently paying CA state taxes. If I am not residing in the US for a while (prob. ~2 years) then what determines the US state I am "resident in"? Seems Nevada (PO box) would be the obvious choice or am I missing something?

"I filed and paid tax’s and SS/NI both sides of the pond" - were you able to get tax paid back because of the dual agreement but also pay into both SS/NI? That's my main concern - I want to keep contributing to both SS and NI but not pay double tax other than that (excluding US state now).
If you are living outside the US you should not be resident in any state…. It may complicate things if you keep a property etc in CA… my focus was the opposite, I had to retain my US residence as a LPR so came home from London 3-4 weekends a month depending on vacation and other factors…

No I got nothing back from the dual tax agreement, that’s not what it does. I was taxed in the UK at 40% or what we the rate was back then, and then when I filed my US tax’s got a credit for the tax paid. It was more than my federal tax’s so I had a carry over on the federal credits (the last part will expire this year, after 10 years unused). The only way to be able to use it would be to earn imcome somewhere with a lower tax rate than the US federal mine). Then I had to pay the NYC and NY city and state tax out of pocket… so my effective tax rate was multiples of what it is here with all the deductions….

Even without the FEIE assuming you are taxed in the UK and only at a federal level in the US (no state or city) you will just pay the higher UK tax and the credit will mean you owe nothing on the US federal level…. At higher rate with NI etc you can expect you net paycheck to be less than 50% of your gross….

I think the FEIE only really helps you if you live somewhere with a lower tax rate than the US not higher ir similar…


Last edited by tht; Jan 25th 2024 at 9:08 pm.
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Old Jan 26th 2024, 6:17 am
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Default Re: Paying (want to) US Social Security - US Employer in UK

Originally Posted by EarthlingHatchedInUK
Thank you for this info. I wasn't clear - I am currently on a W-2. I assume I will be hired into the UK office. Now I am wondering if the company has a UK-registered company (branch) because of tax complications.

Great point about state taxes - not excluded from the dual tax. Yikes! I am currently paying CA state taxes. If I am not residing in the US for a while (prob. ~2 years) then what determines the US state I am "resident in"? Seems Nevada (PO box) would be the obvious choice or am I missing something?

"I filed and paid tax’s and SS/NI both sides of the pond" - were you able to get tax paid back because of the dual agreement but also pay into both SS/NI? That's my main concern - I want to keep contributing to both SS and NI but not pay double tax other than that (excluding US state now).
If you are outside California under an employment-related contract for an uninterrupted period of at least 546 then California considers you nonresident for tax purposes. So moving to the UK for 2 years would mean that your UK wages would not be subject to CA income tax. This is know as safe harbor in the California tax regulations. Income from California such as a rental property would still be taxable but if you rent your home you may have minimum if any CA taxable income.
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Old Jan 27th 2024, 2:26 pm
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Default Re: Paying (want to) US Social Security - US Employer in UK

State income tax is a real pain for expats. Some states really go after you, especially if you return to that state after your overseas posting. Their attitude is that you were only 'temporarily' abroad, and when you come back, you'll still be using their roads, schools, fire departments, etc. This is especially the case if you own property.

Probably best to review this document. I think the California Safe Harbor also has a $200,000 income limit.

https://www.ftb.ca.gov/forms/2022/20...ublication.pdf

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Old Jan 28th 2024, 1:32 am
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Default Re: Paying (want to) US Social Security - US Employer in UK

The California Safe Harbor is subject to a $200k limit on intangible income, basically it is not available if you have investment income of more than $200k per year. There is no limit on employment income that you exclude if you meet the eligibility rules.
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Old Feb 20th 2024, 7:12 am
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Default Re: Paying (want to) US Social Security - US Employer in UK

Thank you for all the replies and very helpful information. Much appreciated.
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