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UK PENSIONS & US SOCIAL SECURITY PENSION

UK PENSIONS & US SOCIAL SECURITY PENSION

Old Jun 1st 2016, 11:57 pm
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Default UK PENSIONS & US SOCIAL SECURITY PENSION

I have worked in the US since 1981, and still a British citizen with a green card. I receive a UK pension but only because I paid all the NH payments myself. In other words, my brief time working in the UK didn't entitle me to benefits, so I took the option to pay them so I would have a pension. I have a letter from the NH that confirms this.

I have yet to apply for my US Social Security pension which I understand can be subject to as much as 15% reduction because of the UK pension entitlement. I am not sure of the rationale for this but wondering if anyone has experience with this situation. Thank you!
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Old Jun 2nd 2016, 12:25 am
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

You've worked in the U.S. since 1981, so maybe you have thirty or more years of "substantial earnings" and social security taxes. If that is the case, you may not be subject to Windfall Elimination Provision (WEP.) But if you have less than thirty years of SS "substantial earnings," you may be subject to WEP.

There've been several threads here with lots of information on WEP, over the last few years.
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Old Jun 2nd 2016, 9:50 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Robin is correct. With 30+ years of SS contributions you escape WEP.

FWIW the rationale for the Windfall Elimination Provision is that US citizens/ residents who work for the government don't contribute to SS, they have a separate pension scheme, so someone who has divided their career between the government and private section might be classified as "low income" by both schemes and receive overly generous benefits because the SS payouts are skewed towards paying more to those on low income (I don't know if the government scheme is the same).

Unfortunately anyone who immigrates to the US as an adult risks getting caught up as collateral damage, because trying to apply rules that were obviously designed for a specific US domestic situation can create nonsensical and often patently unfair situations for immigrants, such as anyone who worked for a government outside the US.

As it happens British state pensions are also exempt from WEP to the extent that they were paid for by voluntary contributions, so even without 30+ years of SS contributions you would likely escape WEP
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Old Jun 5th 2016, 9:41 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

In addition to the 30 year exemption from WEP, if your UK state pension is from voluntary NI payments then WEP does also not apply.
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Old Jun 6th 2016, 5:38 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

I noticed this on wikipedia , "The beneficiary has not obtained 30 Years of Coverage (YOCs) at the age of 62 years." Is this correct? I hope not as it means I will end up being caught by the WEP trap.
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Old Jun 6th 2016, 8:06 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by mrken30 View Post
I noticed this on wikipedia , "The beneficiary has not obtained 30 Years of Coverage (YOCs) at the age of 62 years." Is this correct? I hope not as it means I will end up being caught by the WEP trap.

I don't know what you saw that on, but what it should say is "has not obtained the 30 years of coverage at the age at which they apply for the pension." The first available age is 62, but you don't have to apply then -- in fact, you will get a better pension if you can hold on until 66 or even 70.
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Old Jun 6th 2016, 8:35 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by Nutmegger View Post
I don't know what you saw that on, but what it should say is "has not obtained the 30 years of coverage at the age at which they apply for the pension." The first available age is 62, but you don't have to apply then -- in fact, you will get a better pension if you can hold on until 66 or even 70.
Thanks for confirming this. that is what I thought. Don't believe everything you read on wikipedia. It's possible that I misread the website.

https://en.wikipedia.org/wiki/Windfa...tion_Provision
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Old Jun 6th 2016, 10:00 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by mrken30 View Post
Thanks for confirming this. that is what I thought. Don't believe everything you read on wikipedia. It's possible that I misread the website.

https://en.wikipedia.org/wiki/Windfa...tion_Provision
https://en.m.wikipedia.org/wiki/Talk...tion_Provision

Here's some discussion about this very sentence in the Wikipedia article. Looks like others have questioned it, and the author of the article doesn't have a definite source for the statement...
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Old Oct 5th 2016, 3:39 pm
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Smile Re: UK PENSIONS & US SOCIAL SECURITY PENSION

I have question for the forum on IRS form 6166 which is a cert of tax residency from the USA that avoids double taxation on ones UK pension .

HAS ANY MEMBER DONE THIS?.......... it looks to me that one has to do this every year ? duh!
It also cost $85 to file in IRS Philadelphia and presumably one has to do this in arrears as they will not certify ahead probably for 2017 or even 2016 as its not over yet........so will the UK stop me tax out of my 2017 claim and then I will have to claim it back from the UK each year by submitting the cert of tax residency i buy per year from the USA IRS for $85?

thank you
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Old Oct 5th 2016, 4:02 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by limeyjag8420 View Post
I have question for the forum on IRS form 6166 which is a cert of tax residency from the USA that avoids double taxation on ones UK pension .

HAS ANY MEMBER DONE THIS?.......... it looks to me that one has to do this every year ? duh!
It also cost $85 to file in IRS Philadelphia and presumably one has to do this in arrears as they will not certify ahead probably for 2017 or even 2016 as its not over yet........so will the UK stop me tax out of my 2017 claim and then I will have to claim it back from the UK each year by submitting the cert of tax residency i buy per year from the USA IRS for $85?

thank you
I also saw this on the IRS site https://www.irs.gov/instructions/i8802/ch01.html

United Kingdom

If you are applying for relief at source from United Kingdom (U.K.) income tax or filing a claim for repayment of U.K. income tax, you may need to complete a U.K. certification form (US/Individual 2002 or US/Company 2002) in addition to Form 8802. For copies of these forms, contact HM Revenue and Customs:

On the Internet at
www.hmrc.gov.uk, or

Telephone at: 44-115-974-0897 if calling from outside the U.K., or 0115-974-0897 if calling from the U.K.

Send the completed U.K. form to the IRS with your completed Form 8802.

Maybe you should call HMRC
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Old Oct 5th 2016, 5:07 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by limeyjag8420 View Post
I have question for the forum on IRS form 6166 which is a cert of tax residency from the USA that avoids double taxation on ones UK pension .

HAS ANY MEMBER DONE THIS?.......... it looks to me that one has to do this every year ? duh!
It also cost $85 to file in IRS Philadelphia and presumably one has to do this in arrears as they will not certify ahead probably for 2017 or even 2016 as its not over yet........so will the UK stop me tax out of my 2017 claim and then I will have to claim it back from the UK each year by submitting the cert of tax residency i buy per year from the USA IRS for $85?

thank you
I have only filled the form out once, not yearly. But at the time I filed I did included all my UK pension income. I believe if at a later date you get a new source of UK income you need to refile to cover that source. You certainly do not normally have to file each year.
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Old Oct 5th 2016, 8:13 pm
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Smile Re: UK PENSIONS & US SOCIAL SECURITY PENSION

It's a chicken and egg situation I suppose , maybe I have to let the UK guys tax me in 2017 and then do the IRS 6166 certification of tax residency to get my 2017 tax back and then I will be good to go for 2018 etc ?
One would have thought that it could be proactive as I could get the 6166 from the IRS and send it this year yet .
I looked at the HMC site on form 2001 and it says to send it and the 8802 application to the IRS in philiadelphia USA which doesnt make sense to me .Is this what you did?
thank you for all your input
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Old Oct 5th 2016, 8:20 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by limeyjag8420 View Post
I looked at the HMC site on form 2001 and it says to send it and the 8802 application to the IRS in philiadelphia USA which doesnt make sense to me .Is this what you did?
thank you for all your input
Yes, that is exactly what I did and every year from then the HMRC tax on my UK pension was zero.
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Old Oct 5th 2016, 8:22 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by limeyjag8420 View Post
It's a chicken and egg situation I suppose , maybe I have to let the UK guys tax me in 2017 and then do the IRS 6166 certification of tax residency to get my 2017 tax back and then I will be good to go for 2018 etc ?
One would have thought that it could be proactive as I could get the 6166 from the IRS and send it this year yet .
I looked at the HMC site on form 2001 and it says to send it and the 8802 application to the IRS in philiadelphia USA which doesnt make sense to me .Is this what you did?
thank you for all your input
Send it now and, where applicable, it will stop UK tax from the date they receive it.

Yes you send it to the IRS who validate it and send it on to HMRC.
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Old Oct 5th 2016, 8:24 pm
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Default Re: UK PENSIONS & US SOCIAL SECURITY PENSION

Originally Posted by limeyjag8420 View Post
I looked at the HMC site on form 2001 and it says to send it and the 8802 application to the IRS in philiadelphia USA which doesnt make sense to me .Is this what you did?
thank you for all your input
It goes to the IRS as they endorse the form, before it goes on to HMRC, to certify you pay tax in the US.
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