durham_lad

That is also what I think.

lansbury

That is not what HMRC state. It is US citizens. Non citizens living in the US are not taxed by the US on the UK 25% lump sum. There is a link in one of my other posts to the HMRC web site page.

https://www.gov.uk/hmrc-internal-man...elief/dt19876a

fn-expat

Oops you are right and I was wrong. The savings clause in the Treaty strikes again.

If you are a retired dual US/UK citizen living in the UK with no plans to return to the US think about renouncing.

petitefrancaise

I don't suppose you have a link for this information from the IRS do you? My CPA is pretty clueless on foreign pensions.

lansbury

No I have not found a similar document from the IRS.

petitefrancaise

So, the latest info I have is that the lump sum withdrawal is taxed ( because although not a USC, OH is tax resident here) but only the interest that has been earned is taxable. Not his contributions.

lansbury

Where did that information come from? It seems to be at odds with the HMRC Double Taxation Relief Manual which clearly says a citizen pays, a resident doesn't.

lee3lions

My US retirement age was reached in May but I only had 29 years of US employment. I am going to work until the end of 2020. As I understand it, the Social Security benefits are calculated from your last Tax return - mine being in 2019.
Does that mean that, after they get my 2020 Tax return, I will no longer have a deduction for WEP due to my UK pension, or is it only calculated on years worked up until your Retirement age?
Thanks

Giantaxe

"Years" in this respect are calendar years and they must be "Substantial Earnings Years". This link contains each year's substantial earnings threshold:

https://www.federalretirement.net/we...WEP_Calculator

Your US full retirement age is moot in this regard because the US continues to collect SS taxes on earned income past that date. So do the calculation of how many substantial earnings years you have by looking at your earnings on your SS record. Even if it's 29 taking this year into account, your maximum WEP will be minimal given its phasing out between 20 and 30 years of contributions.

durham_lad

Exactly.

I am retired and part of my income is an unqualified pension paid by my old US company and reported via a W-2 so I am still paying into SS with FICA taxes (no Medicare just SS payments). I will have 28 years of contributions when I start collecting SS but I’m hoping that 2 years after I start collecting that the WEP will go to zero.

Anne Elliot

Just curious about this... what on earth is their rationale for paying you on a W2 and not a 1099R? Lucky for you though, it means you increase your years of coverage.

scrubbedexpat099

I am intrigued, begs the question how they would know?

Even more interesting how the gain would be calculated, not something you get from your Pension Provider.

durham_lad

They pay me on a 1099R as well. The company I joined was a Joint Venture (JV) company owned jointly by 2 large chemical companies and the JV is a legal entity LLC in its own right that owns no assets and makes no profit as the profits generated go to the joint owners. I worked for one of the owners and as an enticement for me to join the JV, where I had been on secondment for 3 years, they offered to sponsor my green card application plus count my date of service with them as the same date of my joining the parent company. This meant that on joining I already had 9 years towards my vacation allowance plus 9 years counted towards their pension plan. When I retired they calculated my pension as if I had been on their payroll for 9 years longer than I had, but for legal reasons they couldn't expect their pension plan to simply fork out more money so they make up the difference by paying me directly, and that has to be reported on a W2. It is a sweet deal as their early retirement rules used to use the "80 points" calculation where once your age plus years of service equals 80, and you are at least aged 55, then you are able to retire on a reduced pension, so my 80 points came up at age 55 instead of 58.

Consequently I get my regular, qualified, pension paid through the pension plan and reported on a 1099R plus a much smaller unqualified pension paid through their payroll system and reported on a W2.

lansbury

When it is something like this, I don't think people should post without giving the source of the information. This is an important topic and others need to be able to check and form their own opinion. I also find it hard to believe that HMRC would put out a public statement on aspects of the tax treaty, without at least consulting with the IRS. In this case from the wording of the HMRC document it would seem the intent was part of the treaty discussions.

In the case of my pension the contributions I made to it were taken from my salary, before tax was deducted. The flip side being you paid tax on all the pension you received. I thought that was fairly standard for pensions in the UK.

scrubbedexpat099

I am in 2 final salary schemes and in both of them my contribution was modest the bulk was an unknown amount paid by Employers as far as I know the cost was not allocated individually but looked at as an overall liability when times weee good I know they took pension holidays not so good now