Re: UK state pension and USA social security
Originally Posted by lansbury
(Post 12408209)
No, the same rules apply under the tax treaty about where pensions are taxed either way.
Not sure, hopefully someone living in the UK in receipt of a 401k will confirm what happens with those. |
Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12408362)
So if one is resident in UK, US social security only taxed in USA ? Is it reported in UK ?
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Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12408362)
So if one is resident in UK, US social security only taxed in USA ?
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Re: UK state pension and USA social security
Originally Posted by lansbury
(Post 12408526)
No I said it was only taxed in the UK.
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Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12408591)
Thanks, for some reason I find this whole pension issue somewhat changing to grasp.
You are right of course but HMRC have made it simpler from 2017 on, they used to only tax 90% of foreign pensions but now they tax it all. IRA, Roth IRA, 401k...., lump sums, periodic payments, Roth conversions, SS WEP, all a constant source of debate and uncertainty. |
Re: UK state pension and USA social security
Originally Posted by durham_lad
(Post 12408621)
It can also be challenging (sorry, couldn’t resist).
You are right of course but HMRC have made it simpler from 2017 on, they used to only tax 90% of foreign pensions but now they tax it all. IRA, Roth IRA, 401k...., lump sums, periodic payments, Roth conversions, SS WEP, all a constant source of debate and uncertainty. Haven't even started to look at distributions from IRA and 401k, let alone effect of distributions from country without tax treaty with UK. |
Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12408638)
Does receiving UK pension from the share from Class 3 contributions effect at all amount I receive from USA?
In my case I will be WEP’ed to the max based on my 2 UK private pensions, and I don’t have 30 years of SS contributions, only 23. (I wasn’t going to work another 7 years just to avoid WEP) |
Re: UK state pension and USA social security
Originally Posted by durham_lad
(Post 12408646)
From discussions I have seen you can calculate the OAP sum you get from work as opposed to voluntary contributions. e.g. OAP received is £150/week based on 30 years of contributions of which 15 years were paid for by after tax voluntary class 2 or 3 contributions means that only £75/week should be used in the WEP calculation.
In my case I will be WEP’ed to the max based on my 2 UK private pensions, and I don’t have 30 years of SS contributions, only 23. (I wasn’t going to work another 7 years just to avoid WEP) |
Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12408638)
Seems a bit odd, if WEP kicks in to reduce my benefits, then the UK taxes them 100% if I am resident there, but then as long as I have to file a return in USA I have to report UK pension.
If you are resident in the US and receive US SS, it is only taxed at 85% maximum. I have a question: on the worksheet for line 20b (taxable amount of SS) you use box 5, net benefits, for the amount taxable in the calculations. For those of you in the US, has box 5 been reduced by the deductions for Medicare Parts b ( if applicable), etc.? In other words, if you have no other benefits repaid (box 4), does box 5 = box 3? For the resident in the UK, you use box 3 (or box 5 if it you wish - it makes no difference), benefits paid, on line 20a for the US 1040 return (and $0 for 20b). For the SA 106 UK return, and if box3 = box 5, you will use the total of the 12 monthly (UK tax year) payments (and since it is paid in £s, the exchange rate is not a factor) for the amount of US SS received. As mentioned above, if the US SS benefit has been WEPed, it's a reduced amount. HMRC then tax you on 100% of this reduced amount (£ equivalent of boxes 3 and 5), so 15% above the maximum in the US. When you prepare your form 1040 for the IRS, you will not be able to take a tax credit for the amount of tax paid to the UK for the SS benefit. (1116 - you may only take credits for comparable taxable income and US SS is not taxable). You perhaps pay UK tax at the 40% rate. OR questionably, and I don't expect anyone to admit to this, you could claim for UK purposes only the amount of £s received in the UK - disregarding the fact that it could be 'lite' by any deductions made for Medicare Parts B, etc. In the Treaty, Social Security is covered in Article 17(3) which is excepted from the saving clause by Article 1(5)(2). So, for the USC in the UK, it's probable the US SS has been WEPed, it is taxed in the UK (for some, including a 40% rate) on an additional 15% (over the US resident), and the tax paid can not be used as tax credits on a 1040/1116 return. It's not that I'm bitter. :huh: (I'm really not bitter, it's just the way it is and I don't mind paying UK tax since I live here. - And, I don't have Med Part b, etc.) |
Re: UK state pension and USA social security
Originally Posted by theOAP
(Post 12408674)
When you prepare your form 1040 for the IRS, you will not be able to take a tax credit for the amount of tax paid to the UK for the SS benefit. (1116 - you may only take credits for comparable taxable income and US SS is not taxable).
I'm glad someone reminded us that filing the US return is simple. |
Re: UK state pension and USA social security
I wanted to make a comment about a post from earlier which I cannot locate.
I am UK resident and a non-US person. My US tax advisor has told me that periodic pension payments (such as from US social security) are taxable in the UK only in my case. He said that he suggests (he would, wouldn't he?) that I report to IRS, but that there is no obligation to do so. I guess it would just make things easier in the event of IRS questions if you did report to them. Since he is a CPA who specialises in this field, I assume he knows what he is talking about and I have full confidence in him. Just thought I would share this. |
Re: UK state pension and USA social security
Originally Posted by Alexamck
(Post 12412412)
I wanted to make a comment about a post from earlier which I cannot locate.
I am UK resident and a non-US person. My US tax advisor has told me that periodic pension payments (such as from US social security) are taxable in the UK only in my case. He said that he suggests (he would, wouldn't he?) that I report to IRS, but that there is no obligation to do so. I guess it would just make things easier in the event of IRS questions if you did report to them. Since he is a CPA who specialises in this field, I assume he knows what he is talking about and I have full confidence in him. Just thought I would share this. Your situation may be different? |
Re: UK state pension and USA social security
Originally Posted by theOAP
(Post 12412422)
If you are a UKC, resident in the UK, and not a USC or US Person, and your only source of US income (or assets) is US SS paid to you by monthly payments to your UK bank account, you are not required to submit a US tax return.
Your situation may be different? |
Re: UK state pension and USA social security
Originally Posted by theOAP
(Post 12408674)
Since this is a thread on Social Security:
If you are resident in the US and receive US SS, it is only taxed at 85% maximum. I have a question: on the worksheet for line 20b (taxable amount of SS) you use box 5, net benefits, for the amount taxable in the calculations. For those of you in the US, has box 5 been reduced by the deductions for Medicare Parts b ( if applicable), etc.? In other words, if you have no other benefits repaid (box 4), does box 5 = box 3? For the resident in the UK, you use box 3 (or box 5 if it you wish - it makes no difference), benefits paid, on line 20a for the US 1040 return (and $0 for 20b). For the SA 106 UK return, and if box3 = box 5, you will use the total of the 12 monthly (UK tax year) payments (and since it is paid in £s, the exchange rate is not a factor) for the amount of US SS received. As mentioned above, if the US SS benefit has been WEPed, it's a reduced amount. HMRC then tax you on 100% of this reduced amount (£ equivalent of boxes 3 and 5), so 15% above the maximum in the US. When you prepare your form 1040 for the IRS, you will not be able to take a tax credit for the amount of tax paid to the UK for the SS benefit. (1116 - you may only take credits for comparable taxable income and US SS is not taxable). You perhaps pay UK tax at the 40% rate. OR questionably, and I don't expect anyone to admit to this, you could claim for UK purposes only the amount of £s received in the UK - disregarding the fact that it could be 'lite' by any deductions made for Medicare Parts B, etc. In the Treaty, Social Security is covered in Article 17(3) which is excepted from the saving clause by Article 1(5)(2). So, for the USC in the UK, it's probable the US SS has been WEPed, it is taxed in the UK (for some, including a 40% rate) on an additional 15% (over the US resident), and the tax paid can not be used as tax credits on a 1040/1116 return. It's not that I'm bitter. :huh: (I'm really not bitter, it's just the way it is and I don't mind paying UK tax since I live here. - And, I don't have Med Part b, etc.) |
Re: UK state pension and USA social security
Originally Posted by morpeth
(Post 12412701)
I was curious , why would someone living in UK wish to pay for Medicare ? As some sort of back up ?
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