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UK state pension and USA social security

UK state pension and USA social security

Old Jan 29th 2016, 8:21 pm
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Default Re: UK state pension and USA social security

Welcome to BE.

You pay tax on your UK State pension in the US, as long as you are resident here, not in the UK. As you have been here 21 years I will assume she has less than 30 years contributions into SS. Therefore her SS will be subject to the Windfall Eliminate Provision (WEP). https://www.ssa.gov/pubs/EN-05-10045.pdf

ETA: The above assumes she will claim SS based on her own contributions. If she claims a spouse SS pension based on your contributions she will get 50% of your pension. If you receive both UK State and SS and have less than 30 years SS contributions, your SS pension will be subject to WEP.

Last edited by lansbury; Jan 29th 2016 at 8:43 pm.
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Old Jan 29th 2016, 9:19 pm
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Default Re: UK state pension and USA social security

Hi Lansbury thank you for your very quick reply could you give us an idea of how much she will lose she is receiving around $700 from her uk state pension she is expecting to get around $2000 social security in the US , from her own contributions , thank you once again .
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Old Jan 29th 2016, 9:32 pm
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Default Re: UK state pension and USA social security

Originally Posted by Levans View Post
Hi Lansbury thank you for your very quick reply could you give us an idea of how much she will lose she is receiving around $700 from her uk state pension she is expecting to get around $2000 social security in the US , from her own contributions , thank you once again .
It is a sliding scale depending on how many years SS contributions have been paid. They cap a maximum amount at 50% of the pension you receive from non covered employment. So in your wife's case a max amount of 50% of her UK pension converted to US dollars. On the figure you give the maximum would be $350. Maximum WEP is at 20 years or less SS contributions reducing to nil if you have 30 years or more. https://www.socialsecurity.gov/planners/retire/wep-chart.html.

There is an online calculator here https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

Last edited by lansbury; Jan 29th 2016 at 9:37 pm.
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Old Jan 29th 2016, 10:16 pm
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Default Re: UK state pension and USA social security

I imagine falling under WEP would make it even more advantageous to defer taking SS until sometime between ages 66 and 70, as you'd get the incremental 8% pa uplift AND not lose (in this case) $350 every month for up to 4 years.
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Old Jan 29th 2016, 11:45 pm
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Default Re: UK state pension and USA social security

Originally Posted by mrken30 View Post
In otherwords it may get complicated, because tax rule for rentals in the US are very different to the UK. Depreciation being just one difference.
Not really. If you are not a US citizen and lived in the UK with US and UK rentals and you are taxed on an arising basis you do your taxes in the UK first and pay the UK tax on the rental income using the UK rules. Then you do your US taxes and work out your US rental income and use the UK tax you paid as a credit. The state taxes might be an issue as sometimes you don't get FTC.
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Old Jan 29th 2016, 11:54 pm
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Default Re: UK state pension and USA social security

Hi Lansbury Thank you so much for your help , will they also take 50 % off my uk pension when I claim my US social security I will be claiming off my wife's US contributions I will start claiming my UK in 18 months and will start claiming my social here in 3 yrs the same time as my wife and as mentioned I will be claiming social security off my wife's , as I have only worked in the US for a few yrs , Hi Kodokan thank you for your info as well .
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Old Jan 30th 2016, 7:20 am
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Default Re: UK state pension and USA social security

Originally Posted by Levans View Post
Hi Lansbury Thank you so much for your help , will they also take 50 % off my uk pension when I claim my US social security I will be claiming off my wife's US contributions I will start claiming my UK in 18 months and will start claiming my social here in 3 yrs the same time as my wife and as mentioned I will be claiming social security off my wife's , as I have only worked in the US for a few yrs , Hi Kodokan thank you for your info as well .
If you are claiming SS off of your wife's contributions, which is how I claim, your pension will not have anything taken off of it. They will work your wife's SS out less the WEP amount and you will get 50% of that.

It is not the UK pension which is reduced, it is the US SS which is subject to WEP.
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Old Jan 30th 2016, 7:47 am
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
If you are claiming SS off of your wife's contributions, which is how I claim, your pension will not have anything taken off of it. They will work your wife's SS out less the WEP amount and you will get 50% of that.
If you are getting 50% of a WEP'd amount of SS, then effectively your payment is WEP'd. What you are saying is that they don't apply WEP to an already WEP'd amount.
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Old Jan 30th 2016, 5:37 pm
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Default Re: UK state pension and USA social security

Originally Posted by Giantaxe View Post
If you are getting 50% of a WEP'd amount of SS, then effectively your payment is WEP'd. What you are saying is that they don't apply WEP to an already WEP'd amount.
If you want to split hairs yes. What I'm saying is when the spouse pension amount is calculated WEP is not part of that calculation. There is no separate WEP deduction.

If you answer the question is the spouse pension subject to WEP with a yes then people think it is literally reduced. Just look back at previous posts.
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Old Jan 30th 2016, 5:42 pm
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Default Re: UK state pension and USA social security

Originally Posted by lansbury View Post
If you want to split hairs yes. What I'm saying is when the spouse pension amount is calculated WEP is not part of that calculation. There is no separate WEP deduction.

If you answer the question is the spouse pension subject to WEP with a yes then people think it is literally reduced. Just look back at previous posts.
I understand what you are saying but I don't think it's splitting hairs to point out that a spouse's SS will also be less in these circumstances than if the WEP did not exist.
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Old Jan 30th 2016, 7:37 pm
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Default Re: UK state pension and USA social security

Hi Lansbury , Thank you so much for your help , I will get in touch with you again just before I claim and talk with you again , it sounds like you are the same as me in respect of you claiming of your wife SS , once again thank you so much .
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Old Jan 30th 2016, 7:50 pm
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Default Re: UK state pension and USA social security

Originally Posted by Levans View Post
Hi Lansbury , Thank you so much for your help , I will get in touch with you again just before I claim and talk with you again , it sounds like you are the same as me in respect of you claiming of your wife SS , once again thank you so much .
Please do. We both claimed in early 2015 so I can give you an idea of what to expect and have prepared.
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Old Feb 15th 2016, 11:28 pm
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Default Re: UK state pension and USA social security

Hello to all, I have fortunately just found this forum and I am absolutely impressed by the depth of knowledge shown by forum contributors.

I am hoping someone can guide me regarding my personal situation, I have read many of the posts here but I'm still lost, must be getting thick (thicker) in my old age!

Until very recently I had wrongly assumed I was not entitled to State Pension under the UK system as I left in the early 80's and worked in the US for a US company for a couple of years, returned to the UK for two years or so, then came back to the US and have been here since then. I haven't paid into the UK system since the mid 80's. I will be 63 in October this year. I requested a State Pension Statement and was surprised to learn that I have 15 qualifying years and so qualify under the new State Pension system in the UK for a reduced pension. I also have enough on my earnings record in the US to get about $700 a month Social Security here at my full US retirement age.

Am I right in believing my SS here will be reduced due to WEP? My US Social Security earnings record goes back to 1982, I have 18 years of taxed Social Security Earnings so I'm under the 30 years, also some years US earnings are very low and some years are zero as I have had rental income not subject to social security taxes.

My US born wife has a more substantial social security pension than I and we were advised (before I learned I am eligible to receive a UK pension) that I file early for US benefits and that she claim spousal benefits on my US record (she's almost 66) while letting her social security grow until she's 70. If I'm WEP'd doesn't her spousal suffer also?

Am I able to make voluntary payments to my UK record and should I? Roughly how much are they and will I be able to make Class 2 payments? What's the return on those payments?

Sorry for the long post, I'm pretty confused.
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Old Feb 16th 2016, 7:20 am
  #1094  
 
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Default Re: UK state pension and USA social security

Originally Posted by CatSailor View Post

Am I right in believing my SS here will be reduced due to WEP? My US Social Security earnings record goes back to 1982, I have 18 years of taxed Social Security Earnings so I'm under the 30 years, also some years US earnings are very low and some years are zero as I have had rental income not subject to social security taxes.

My US born wife has a more substantial social security pension than I and we were advised (before I learned I am eligible to receive a UK pension) that I file early for US benefits and that she claim spousal benefits on my US record (she's almost 66) while letting her social security grow until she's 70. If I'm WEP'd doesn't her spousal suffer also?
You SS would be subject to WEP. If your spouse claims against your pension she would receive 50% of your pension after it has the WEP taken from it.

I claimed a spouse pension when I was 66, my wife being younger and I received 50% of the pension (less WEP) she would have received if she had claimed at 66 , not the pension she actually received. So I assume your wife will receive 50% of what your pension would be as if you were 66 when you claimed, less the WEP.
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Old Feb 16th 2016, 4:51 pm
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Default Re: UK state pension and USA social security

Thank you lansbury for your response that helps. If I understand correctly, my Primary Insurance Amount (PIA) calculated using my earnings record in the US and upon which my Social Security payments are based is reduced by WEP, (because I'm eligible for a UK State Pension and I do not have 30 years substantial earnings under the US system).

As a result of my reduced PIA my wife's claim for spousal Social Security using a 'restricted application' under the US system is also reduced as it's based on the same (my) PIA. However, when my US born wife (who has no earnings that have not been subject to Social Security taxes), claims her own benefits under her own earnings record and PIA I will, provided I'm 66+, be able to then claim excess spousal based on her PIA.

My total Social Security payment will be somewhat reduced however, as part will be based on my reduced by WEP, PIA and part will be from excess spousal benefit based on my wife's PIA which is not subject to WEP. Whew! Have I got it figured right?

Also, if you don't mind, or if another forum member can help, should I make 6 years of voluntary NI payments? If I can make class 2 I think it's only around 10 pounds a month, by how much will that increase my UK Pension? Thank you all for such an informative and knowledgeable resource.
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