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UK state pension and USA social security

UK state pension and USA social security

Old Jul 13th 2018, 1:53 am
  #1561  
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Default Re: UK state pension and USA social security

Originally Posted by Owen778 View Post
I'm sure I'd read it from a pretty reliable source, possibly the IRS, but I couldn't find it on publication 535, which would be the most obvious place: https://www.irs.gov/pub/irs-pdf/p535.pdf

On a quick search, I found a couple of statements saying you must take all business deductions, but nothing I'd consider definitive:
https://www.nafcc.org/Must-I-Claim-Allowable-Deductions I don't think their links have the general implications they think they do.
https://www.cnbc.com/2017/10/31/smal...-worth-it.html No link to say where this comes from.

So, maybe?
First one seems to be tied to claiming the Earned Income tax Credit, which makes sense given its structure.

The second link actually raises another possibility of why you might want to claim less deductions, namely to increase one's IRA deduction.
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Old Jul 13th 2018, 5:38 pm
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Default Re: UK state pension and USA social security

Hi All, thanks for the continued feedback. I couldn't reply yesterday.
In all honesty, I don't see how the IRS would know whether you had deducted all of your business expense deductions or not, if you are just a one person independent. And if you went to a 3rd party tax service like HR Block, which often employs people who once worked for the IRS, their main goal seems to be to reject as many potential business deductions as they can. At least that is what I have been told from those who have tried it.

Meanwhile, this is the official US Social Security Link giving the accurate "Substantial Earnings" minimum.
https://www.ssa.gov/pubs/EN-05-10045.pdf
My husband's minimums start much higher than the required amount, and then end up too low. Not the direction one would prefer.
Now I have to figure out how the fact that he paid into his State Pension with voluntary payments for over 10 years affects the outcome. And then balance the result against the fact that he will get some income and I am supposed to qualify for the spousal supplement. I'm beginning to think we can only find this out by calling Baltimore?????? Because if it's going to simply complicate our US tax forms for very little reward, then I'd like to know, before we apply for it.

Other headache is whether to deposit it in England, or bring it to the US with the current post Brexit vote exchange rate being so low.
At the moment, I'm beginning to have fantasies of just abandoning it all, and running off to Thailand to volunteer at an Elephant rescue sanctuary. .....Maybe we should investigate the Cayman Islands, ....I'm only half joking.
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Old Jan 24th 2019, 2:51 pm
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Default Re: UK state pension and USA social security

I still dont know where $791 comes from?
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Old Jan 24th 2019, 3:17 pm
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Default Re: UK state pension and USA social security

Originally Posted by Nelbelmom View Post
In all honesty, I don't see how the IRS would know whether you had deducted all of your business expense deductions or not
I often don't do this. Can't be faffed with the minutiae and it helps me increase my individual 401K contribution via a percentage of my LLC profits.
I don't claim any earned income credit.
Audits are nothing to be scared of.

Last edited by Hotscot; Jan 24th 2019 at 3:22 pm.
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Old Jan 24th 2019, 3:25 pm
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Default Re: UK state pension and USA social security

Originally Posted by 21Hmgreen View Post
I still dont know where $791 comes from?
That is the cost of Class 3 NI contributions for the tax year 2018/19 (52*£14.65)

https://www.gov.uk/voluntary-nationa...ibutions/rates
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Old Feb 7th 2019, 1:58 pm
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Default Re: UK state pension and USA social security

I have a question for you the group on WEP and Totalization.

I 39 and have been working in the US with contributions to SS since 2002/3 and will continue to work here till I hit that 30 years requirement under WEP.

In 2009-2010 I transferred and worked in the UK for a full year (Oct to Oct on a work visa). I contributed to their National Insurance for their UK fiscal year 2009/10 and 2010/11 (as their fiscal year end is April). I have subsequently relocated back to US and have been here since working for the same parent company. I have continued to pay into UK Income tax and NI for 3 years due to some company stock options that I received while in UK and eventually liquidated over the past 3 years but that earnings is treated as UK earnings and not US earnings(while I still pay my US taxes etc and I get double withheld from UK and US). I had 5 qualifying years of National Insurance contributions in the UK even though I resided in UK only for a year over two fiscal tax years and would normally need 10 qualifying years to be eligible for a State Pension from the UK. I can however "buy" up to 10 missing years at a reasonable rate.

I’m considering buying up UK basic/minimum pension and pay what’s the equivalent of the remaining 3-4k GBP. But I would like to inquire around WEP and Totalization.
  1. My understanding is that as long as I have contributed to SS for 30 years +, there will be no reduction of my US pension if I was to receive a UK pension or any other pension (ie from Canada since I'm a Canadian citizen also)
  2. Totalization does not apply since it’s really for people who does not qualify for full pension in one country or another and instead totals up to “credits” to maximize their pension payout in one of the countries but not both.
  3. Since US SS only looks at your highest income over 30 years, does it make sense for me to relocate back to Canada after full 30 years of payment to build up Canadian Pension CPP even though they dont have a minimum contribution requirement etc
Let me know if this all makes sense. While I am trying to override the WEP rule but since I’ll be working and contributing for over 30 years, it shouldn’t impact my US SS benefit. Would it make sense to buy up the remaining 5 years under UK NI for qualification of basic coverage?


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Old Feb 7th 2019, 2:20 pm
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Default Re: UK state pension and USA social security

It may be worth noting social security is based on average earnings over the last 35 years as far as I know. WEP disappears after 30 years.
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Old Feb 7th 2019, 2:34 pm
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Default Re: UK state pension and USA social security

Originally Posted by mrken30 View Post
It may be worth noting social security is based on average earnings over the last 35 years as far as I know. WEP disappears after 30 years.
The 35 years over which you earned the most, not necessarily the last 35 years. https://www.ssa.gov/pubs/EN-05-10070.pdf

We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
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Old Feb 7th 2019, 5:26 pm
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Default Re: UK state pension and USA social security

My concern would be that the dept of works and pensions would require you to have a minimum of 10/11 years NIC’s before being allowed to buy any more years.

of course you should call dwp as I may be wrong.
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Old Feb 7th 2019, 6:15 pm
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Default Re: UK state pension and USA social security

Originally Posted by nearpost1 View Post
My concern would be that the dept of works and pensions would require you to have a minimum of 10/11 years NIC’s before being allowed to buy any more years.

of course you should call dwp as I may be wrong.
I did call. Not sure if it's that department they said I can either catch up and try for class 2 for lower cost voluntary contribution or class 3 at the higher catch up cost. Also, online on my profile on uk site, it shows I can catch up with a deadline into 2021/2022 OR you can ask for refund for all taxes paid.

I will check with UK govt later but I wanted to be 100% sure this will all work the way I think it will as to US SS and CPP in Canada.
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Old Feb 7th 2019, 6:17 pm
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Default Re: UK state pension and USA social security

Originally Posted by ddavid1101 View Post
I did call. Not sure if it's that department they said I can either catch up and try for class 2 for lower cost voluntary contribution or class 3 at the higher catch up cost. Also, online on my profile on uk site, it shows I can catch up with a deadline into 2021/2022 OR you can ask for refund for all taxes paid.

I will check with UK govt later but I wanted to be 100% sure this will all work the way I think it will as to US SS and CPP in Canada.
o.k. That’s great. Seems I am confusing something I read, maybe what I read is from the old scheme where you only needed 30 years nic’s.
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Old Feb 8th 2019, 11:51 am
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Default Re: UK state pension and USA social security

Hi all,

I have a question that I'm sure everyone is going to groan at because of how little I know - so apologies in advance.

I'm 25, and moving to the US next month. From reading the HMRC website, because of the Social Security agreement, I don't need to continue to make NIC contributions over here, do people just make them to beef up their state pensions?
Secondly, to be eligible you need to have been paying in for 3 years, I think that I will only have been making contributions for 2 years and 11 months - I've contacted HMRC to see if I'm eligible but if I'm not - how much will this screw me down the line? I'm going on an L2 visa so I won't be working for the first 3-6 months until my EAD comes in - do I need to declare to anyone that I'm making neither NIC nor SS contributions?
My husband has 8 years of contributions so will be fine, should he continue to make voluntary contributions?

Thanks everyone!
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Old Feb 8th 2019, 4:41 pm
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Default Re: UK state pension and USA social security

Originally Posted by eohare551 View Post
Hi all,

I have a question that I'm sure everyone is going to groan at because of how little I know - so apologies in advance.

I'm 25, and moving to the US next month. From reading the HMRC website, because of the Social Security agreement, I don't need to continue to make NIC contributions over here, do people just make them to beef up their state pensions?
Secondly, to be eligible you need to have been paying in for 3 years, I think that I will only have been making contributions for 2 years and 11 months - I've contacted HMRC to see if I'm eligible but if I'm not - how much will this screw me down the line? I'm going on an L2 visa so I won't be working for the first 3-6 months until my EAD comes in - do I need to declare to anyone that I'm making neither NIC nor SS contributions?
My husband has 8 years of contributions so will be fine, should he continue to make voluntary contributions?

Thanks everyone!
If I were in your position I would make sure I contributed to NI for at least another month before moving over. Being able to make voluntary contributions - especially class 2 - is a real bargain. To get a full UK pension you need 35 years of contributions, so do the maths: do you think it probable that in the future you would work for another 32 years 1 month in the UK?
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Old Feb 19th 2019, 9:58 am
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Default Re: UK state pension and USA social security

Originally Posted by ddavid1101 View Post
I have a question for you the group on WEP and Totalization.

I 39 and have been working in the US with contributions to SS since 2002/3 and will continue to work here till I hit that 30 years requirement under WEP.

In 2009-2010 I transferred and worked in the UK for a full year (Oct to Oct on a work visa). I contributed to their National Insurance for their UK fiscal year 2009/10 and 2010/11 (as their fiscal year end is April). I have subsequently relocated back to US and have been here since working for the same parent company. I have continued to pay into UK Income tax and NI for 3 years due to some company stock options that I received while in UK and eventually liquidated over the past 3 years but that earnings is treated as UK earnings and not US earnings(while I still pay my US taxes etc and I get double withheld from UK and US). I had 5 qualifying years of National Insurance contributions in the UK even though I resided in UK only for a year over two fiscal tax years and would normally need 10 qualifying years to be eligible for a State Pension from the UK. I can however "buy" up to 10 missing years at a reasonable rate.

I’m considering buying up UK basic/minimum pension and pay what’s the equivalent of the remaining 3-4k GBP. But I would like to inquire around WEP and Totalization.
  1. My understanding is that as long as I have contributed to SS for 30 years +, there will be no reduction of my US pension if I was to receive a UK pension or any other pension (ie from Canada since I'm a Canadian citizen also)
  2. Totalization does not apply since it’s really for people who does not qualify for full pension in one country or another and instead totals up to “credits” to maximize their pension payout in one of the countries but not both.
  3. Since US SS only looks at your highest income over 30 years, does it make sense for me to relocate back to Canada after full 30 years of payment to build up Canadian Pension CPP even though they dont have a minimum contribution requirement etc
Let me know if this all makes sense. While I am trying to override the WEP rule but since I’ll be working and contributing for over 30 years, it shouldn’t impact my US SS benefit. Would it make sense to buy up the remaining 5 years under UK NI for qualification of basic coverage?
My understanding if one worked 30 years in USA, the WEP rule doesnt apply for pension earned in UK from working. My question is under the totalization agreement does that mean one can use years working in USA towards mroe years credited for full state pension ?

My other question- I have read for UK state mention one needs to have worked 3 years in UK before departing, or have three years contrbutions ( for example through class 2 or class
3. Is it an either or ?
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Old Feb 19th 2019, 9:59 pm
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Default Re: UK state pension and USA social security

Originally Posted by morpeth View Post
My understanding if one worked 30 years in USA, the WEP rule doesnt apply for pension earned in UK from working. My question is under the totalization agreement does that mean one can use years working in USA towards mroe years credited for full state pension ?
If you do not qualify for either a UK or US pension you can combine them to qualify for one of them. If you qualify for one or both pensions, you cannot transfer from one to the other.

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