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Uk military pensions and paying US tax?

Uk military pensions and paying US tax?

Old Dec 13th 2015, 11:34 am
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Default Uk military pensions and paying US tax?

Hello, everyone would appreciate some advice.

Our daughter was born in the USA (while I was on 2 year exchange there with a US Army unit) and is a US citizen. If she sponsors us we can get permanent resident status and we have thought of retiring to the US. My question is can anyone advise do I have to pay tax on my uk pensions, both military and in time state pension, in both countries or is there a way to restrict it to just one - I assume the US as we would be living there? All help appreciated - thanks.
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Old Dec 13th 2015, 11:40 am
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Default Re: Uk military pensions and paying US tax?

Yes, your daughter can sponsor you, but only if she is living in the US. It will likely take around two years to complete the visa process.

The rules around taxation of pensions is a whole other subject that can be a bit tricky. Suffice to say, you only get taxed once, and "government pensions" (pensions resulting from working for the government) are subject to special rules, which means they are taxed by the country that pays them, so it is likely your pension would be taxed in the UK. UK state pensions can be paid gross to US residents, and are taxed in the US.

You should take a look at the health insurance implications of retiring in the US - I have seen more than once that the average cost of health services (insurance, copays, deductibles, drugs) that retirees have to pay "out of pocket" during their retirement, is $250,000. I don't recall if that is per individual or per couple.

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Old Dec 13th 2015, 12:37 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by Pulaski View Post
Yes, your daughter can sponsor you, but only if she is living in the US. It will likely take around two years to complete the visa process.

The rules around taxation of pensions is a whole other subject that can be a bit tricky. Suffice to say, you only get taxed once, and "government pensions" (pensions resulting from working for the government) are subject to special rules, which means they are taxed by the country that pays them, so it is likely your pension would be taxed in the UK. UK state pensions can be paid gross to US residents, and are taxed in the US.

You should take a look at the health insurance implications of retiring in the US - I have seen more than once that the average cost of health services (insurance, copays, deductibles, drugs) that retirees have to pay "out of pocket" is $250,000. I don't recall if that is per individual or per couple.
+1 on the health insurance aspect of retiring to the USA. Without access to Medicare it can be very expensive.

If you become US resident your UK state pension will only be taxable in the US. If you stay as just a UK citizen (ie don't take US citizenship) then your UK military pension will only be taxable in the UK. You will need to invoke Articles 17 and 19 of the US/UK tax treaty.

Last edited by nun; Dec 13th 2015 at 12:39 pm.
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Old Dec 13th 2015, 7:45 pm
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Default Re: Uk military pensions and paying US tax?

Thank you very much for both your answers. Health insurance costs are not a surprise but I suppose on the other side housing is cheaper, either way lots to consider. Good news on the pension front - I thought it would be worse! I suppose the answer is we will have to try extended stays first and see how it goes.....
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Old Dec 13th 2015, 9:16 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by wiltshiresoldier View Post
Hello, everyone would appreciate some advice.

Our daughter was born in the USA (while I was on 2 year exchange there with a US Army unit) and is a US citizen. If she sponsors us we can get permanent resident status and we have thought of retiring to the US. My question is can anyone advise do I have to pay tax on my uk pensions, both military and in time state pension, in both countries or is there a way to restrict it to just one - I assume the US as we would be living there? All help appreciated - thanks.
Worth mentioning that she cannot sponsor you until she is 21, since you don't mention her age.
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Old Dec 14th 2015, 9:10 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by Pulaski View Post
You should take a look at the health insurance implications of retiring in the US - I have seen more than once that the average cost of health services (insurance, copays, deductibles, drugs) that retirees have to pay "out of pocket" during their retirement, is $250,000. I don't recall if that is per individual or per couple.
I've seen that magnitude of estimate as well, plus it assumes the recipient(s) are on Medicare from age 65.

I'm not sure how expensive it would be for someone not eligible for Medicare such as an immigrant who has not paid into the system. I believe you have to have lived in the US for 5 years to be able to buy Medicare insurance, and then it is available but much more expensive.

There is a useful tool to give the OP an idea of cost after he has lived in the US for 5 years. No idea how much Health Insurance will cost before then.


https://www.medicare.gov/eligibility...c/#eligibility

If you paid Medicare taxes for less than 30 quarters, the standard Part A premium will be $407.00. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium will be $224.00. Some people pay a higher premium if they don't enroll when they're first eligible.

Most people pay a monthly premium for Medicare Part B. The standard monthly premium for Medicare Part B is $104.90 in 2015. Some people pay a higher premium based on their income or if they don't enroll when they're first eligible.
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Old Dec 14th 2015, 9:34 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by Pulaski View Post

You should take a look at the health insurance implications of retiring in the US - I have seen more than once that the average cost of health services (insurance, copays, deductibles, drugs) that retirees have to pay "out of pocket" during their retirement, is $250,000. I don't recall if that is per individual or per couple.
I was told that those in receipt of medicare should budget $6000 a year each for medical expenses. Plus of course any increases in costs over those years.
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Old Dec 14th 2015, 9:40 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by lansbury View Post
I was told that those in receipt of medicare should budget $6000 a year each for medical expenses. Plus of course any increases in costs over those years.
So maybe the $250,000 is per couple, for 20 years of retirement, which is about what $6,000/yr/person equates to, but excluding inflation.
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Old Dec 14th 2015, 9:43 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by Pulaski View Post
So maybe the $250,000 is per couple, for 20 years of retirement, which is about what $6,000/yr/person equates to, but excluding inflation.
I would guess it excludes any catastrophic illnesses as well.
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Old Dec 14th 2015, 9:56 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by lansbury View Post
I would guess it excludes any catastrophic illnesses as well.
Isn't that what insurance is for?
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Old Dec 14th 2015, 10:08 pm
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Default Re: Uk military pensions and paying US tax?

Eeek! I think all in all its worst i.e. The, cost is more than I thought it would be. I suppose everybody says that sounds like plan B... spending say much of the year in the USA but not all of it and not claiming residency and returning to the UK for medical treatment might be the wisest choice at least for the medium term... Thank you again for all your very helpful advice.
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Old Dec 14th 2015, 10:24 pm
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Default Re: Uk military pensions and paying US tax?

Originally Posted by Pulaski View Post
Isn't that what insurance is for?
As an example by Medicare Advantage plan has a co-pay of $250 per day for the first 8 days of a hospital stay. I'm thinking it wouldn't take much to go past $6000 in a year if you had a long term major illness.
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Old Dec 15th 2015, 3:14 am
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Default Re: Uk military pensions and paying US tax?

Medicare Part A is free and part B costs about $100 per month. Then you must buy extra insurance which might be a a couple of hundred a month. there will still be copays and deductibles.

Most people in the US on any health insurance will expect to pay a few thousand in premiums and a few thousand in deductibles. Anyone of advanced years wanting to come to the US should budget at least $10k in potential annual health costs until they qualify for Medicare.
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Old Dec 15th 2015, 5:27 am
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Default Re: Uk military pensions and paying US tax?

Originally Posted by wiltshiresoldier View Post
I suppose on the other side housing is cheaper, either way lots to consider. .....
Housing is not always a lot cheaper than the UK. It all depends where in the US you want to live and where you are in the UK. Average 3 bed house around here in Portland is about 250,000 GBP
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