daccs

Does anyone know if you still have to pay social security in the US? As we wont ever be able to use the services it covers are we exempt?

Thanks

Pulaski

What visa are you on? I believe that some categories of visa holders can elect to exempt themselves.

ChocolateBabz

My hubby didn't have to (L1 Visa) until he got Green Card and was a full time US employee. Here's a link to a previous thread http://britishexpats.com/forum/usa-5...ountry-837421/

Bob

J1 is another I think can do this, but staying any longer than the original visa means having to back pay the tax with penalties. I think it was CaleyJag (sp?) who had this issue.

nun

Who are you working for and what's your visa?

daccs

Thanks all.

I'll be on a L1 visa working in Georgia.

nun

Take a look at the US-UK Totalization agreement. If this is an intra-company transfer and you will be in the US for less than 5 years you can avoid FICA and continue to pay NI. You should talk to your HR/payroll department about this.

International Programs - Totalization Agreement with the United Kingdom

daccs

Thanks that's a great link. If I continue to pay NI in the UK do you know if its at the same rate? I cant seem to find that answer anywhere.

nun

Yes, you'll be paying Class 1

Cook_County

More exactly your employer will be withholding Class 1. This is mandatory under the totalisation agreement if the assignment meets the conditions.

Michael

NI Class 1 taxes may possibly be cheaper than FICA taxes (social security and Medicare) but it may not be that easy of a choice. The following are the reasons

• Social security benefits are higher than UK state pensions.
• Although FICA contributions may possibly be paid at a higher rate than NI contributions, you stop paying FICA taxes after you've paid contributions on you first $117,000 of income. Therefore if you get big bonuses or exercise stock options, your contributions under FICA may be lower than NI.
• Even though you may never become a USC, you are still eligible for social security benefits if you work for a minimum of 40 quarter (10 years).
• If you aren't eligible for social security benefits, the quarters paid for FICA can be used towards NI.
• If you are eligible for social security benefits, you can collect NI as well as social security benefits upon retirement but there may be some reductions in FICA benefits due to the Windfall Elimination Provision (WEP). Not always is there a reduction in social security benefits due to WEP.
• Therefore if you don't pay FICA for 5 years and instead pay NI and happen to remain working in the US for another 5 years, you may be worst off at retirement than if you paid FICA for the full 10 years.

Retirement Planner: Windfall Elimination Provision (WEP)

nun

They can only be used to qualify for a benefit, they are not used to calculate that benefit.

If the OP is on an assignment that will last less than 5 years then it's probably best to keep up the NI withholding and opt out of FICA.

Remember voluntary NI payments that you make will not be counted in a WEP calculation.

daccs

Thanks All

I'm staying for 5 years but hoping to stay longer if I can get residency. Comparing the two I think SS in the Us may actually be a lower rate than NIC here in the UK.

nun

Then you should pay US SS and also pay voluntary Class 2 NICs

robin1234

What happens, though, in this scenario. He chooses to pay voluntary Class 2 NICs while working in the US. As it happens, he chooses to return to the UK after four or five years. By retirement age, he's paid 35 or more years of regular working NI contributions. Do they then refund the voluntary NICs, that may have been paid decades earlier?