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bigduckontax
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 2986
Experience:  FCCA FCMA CGMA ACIS
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US citizen. Will my UK pension impact my US social security?

Customer Question

I am British/US citizen. Will my UK pension impact my US social security?
JA: These retirement benefits are supposed to help us but they can be so complicated! The Retirement Expert will help you get the most benefits propertly. Please tell me more, so we can help you best.
Customer: I did not earn a lot in either country. My UK pension is about £6000 per year and my US social security will be about $700 when I take it age age 70.
JA: Is there anything else important you think the retirement accountant should know?
Customer: What else do you need to know? I'm married to a British NRA.
Submitted: 19 days ago.
Category: UK Tax
Customer: replied 19 days ago.
Sorry, I meant $700 per month or $8400 p.a.
Expert:  bigduckontax replied 19 days ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

US Social Security is a form of pension insurance policy. It is not affected by any UK State Pension (SP) awarded.

I do hope that I have set your mind at rest on this matter.

Customer: replied 19 days ago.
Hi Keith. Thanks for your help. I was told that it might be subject to the Windfall Elimination Provision and so reduce the amount of social security I would get from the US government. I have looked at the US Windfall Elimination Provision document and it states a pension from an employer, not a government. Thoughts? Thank you.
Expert:  bigduckontax replied 18 days ago.

Well, you are in the clear then as this is a State Pension.

Emulate Brer Fox 'For he lay low and say nuffin.'

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 18 days ago.
Wow, Keith. You're quick. I can't imagine what time it is where you are?! Is there a social security expert I should speak to as this is first a social security question, then a tax question. The reason I have this Windfall Elimination Provision information is from someone who worked for social security and they said my future social security might be affected by it and quoted that it could affect my social security income by as much as $500/month. Needless to say this would seriously impact my retirement planning! And I agree with you on Brer Fox -- it's why I'm not talking to the social security folks about this!Thank you.
Heather
Expert:  bigduckontax replied 18 days ago.

This is essentially an UK Tax advice service, but if as you say 'the US Windfall Elimination Provision document and it states a pension from an employer,' the State is not an employer so declaration is not necessary. Remember Brer Fox and my late ex Father in Law's dictum, 'Always play the daft laddie!'

It is 9am here, Heather.

Customer: replied 18 days ago.
Ah, so you're in the UK, too. Thanks. I really appreciate your help. Do you offer a tax service? I'd love to find someone local you can answer both US and UK tax queries!
Expert:  bigduckontax replied 18 days ago.

Yes, I mainly answer UK tax queries. US are a trifle more tricky as there are so many items you can offset against tax like if you work from home your entire house running costs for example. I very rarely get asked anyway.

Please don't forget my rating.

Customer: replied 18 days ago.
Can I have you help me with my filing for US taxes? Not sure where you are in the UK, but I'm in greater London and could meet at your office?
Expert:  bigduckontax replied 18 days ago.

Sorry Heather, I live in the Scottish Borders. I am unlikely to be able to help you with your US filing because of the plethora of allowable expenses.

Customer: replied 18 days ago.
Thanks just the same.
Expert:  bigduckontax replied 18 days ago.

Please don't forget my rating.

Expert:  Lane replied 18 days ago.

Hi Heather. My name's Lane ... I am a different expert with a different answer

...

I'm so sorry, but WEP will, most likely, affect your US Social Security benefits.

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There IS a totalization agreement (US/UK Social Security Agreement) that, if you didn't have enough credits under Social Security to receive a benefit at all, may allow you to use credits from UK National insurance (UK "Social Security") to add TO US SSA credits so that you WOULD be eligible for a benefit.

...

But ANY pension received after 1986 generated from work where you did NOT pay INTO US Social Security will cause the WEP to come to play.

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Here's is a site when you can answer some yes and no questions that will tel you whether your US Social Security will be affected by WEP: https://www.ssa.gov/international/wep9.html

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And here's the calculator that will ESTIMATE your benefit, if you have a pension from work not covered by Social Security.

https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

....

Finally, yes I can help with your US tax questions ... Pleas let me know what questions you have.

...

Lane

...

...

I have a law degree, with electives in Tax Law, Estate law, Corporate law, and business planning … an MBA, with specialization in finance a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Expert:  bigduckontax replied 18 days ago.

Post to clear my question list.

Customer: replied 18 days ago.
Hi Lane. The challenge here is that I don't think my recent employer contributed to taxes because I was already getting the UK pension (I had retired then gone back to work). Does this count? Thanks.
Expert:  Lane replied 18 days ago.

You can check your earnings record with Social Security, but it's illegal for a US employer that's not in a government or other pension system where Social Secuity isn't paid at all not to woithhold and then match Sociaol Security and Medicare taxes.

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See this from IRS:

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Employer's Responsibility

Employers must report income and employment taxes withheld from their employees on an Employer's Quarterly Federal Tax Return (Form 941) and deposit these taxes in full to an authorized bank or financial institution pursuant to Federal Tax Deposit Requirements. Employers are also responsible for filing a FUTA return annually, and depositing those taxes.

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Employers who do not comply with the employment tax laws may be subject to criminal and civil sanctions for willfully failing to pay employment taxes.

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Now if your SElF employed (paid as a contractor on a 1099), then you would have haid both the employer and employee half of social security and Medicare yourself on a Schedule SE with your tax return.

Customer: replied 16 days ago.
Hi Lane. I am a joint US/UK citizen and work in the UK for a UK employer. They take out Income tax, but not national insurance because I am already drawing the UK standard pension. This is why I wonder about the Windfall Tax and how it would apply to me. I am 67 and plan to start drawing social security at age 70. Thank you.
Expert:  bigduckontax replied 16 days ago.

Post to clear my question list.

Customer: replied 16 days ago.
Sorry, I don't know what you mean -- should I start a whole new chain? When you say post -- I have posted!
Expert:  bigduckontax replied 16 days ago.

No, it is just me clearing my list otherwise it would hang about for ever! An US expert is dealing with your question.

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