US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
@Heidi – I see what you mean….I think. The Technical Explanation says
It sounds like you’re paying more than this? When you complained, did you complain to the Competent Authority under Article 25?
@iota, re: your post May 14, 8:12am….
My story is similar to yours. After leaving the US and living in Canada for over 40 years, I discovered much to my disgust and horror that the US still expected me to file US tax returns so I could “pay my fair share”. While I was doing the research and slogging through all the paperwork on that, I requested a record of my account from the SSA to see if I qualified for benefits. The answer turned out to be that I hadn’t worked and paid into their system for enough time before I left for Canada. So I left it at that and moved on.
A couple of years (and lots of IRS forms) later when I was applying for my Canadian retirement benefits, I mentioned in casual conversation with the nice lady at Service Canada (the Canadian government division that deals with Canada’s pensions) the fact that the money I had paid into the US system was apparently a write-off. Her reply was, “no, that’s not necessarily true”. I forgot all about that conversation for almost a year until one day I got a call from her telling me to expect a call from SS. It turns out that Service Canada person had taken it upon herself to look into my records and found that, in fact, I was eligible for SS benefits under the totalisation agreement between the two countries. If it hadn’t been for the US and its stupid CBT, none of this would have ever come to light.
So now, the US Treasury gets to pay me a monthly check for the rest of my life. I like to think of it as the US now having to “pay its fair share” for the torment and pain they have caused me in my retirement years. They are the author of their own fate. Every month I take special delight when that money rolls in and the best part is that it is only taxable in Canada! The last laugh is always the best.
@Iota
Thanks so much for finding that.
I will take it up with them again, and higher up if I get no satisfaction.
@iota
Can you give me the exact source of this document so I can forward it to the Swiss tax Dept.
Thanks a million.
@maz – “Every month I take special delight when that money rolls in and the best part is that it is only taxable in Canada! The last laugh is always the best.”
Absolutely! 🙂
Did you apply to have the benefit backdated to the time when you checked if you were eligible and were incorrectly told “no”?
I asked if I could get mine backdated, but I couldn’t find the paperwork to prove I had been wrongly told I wasn’t eligible. I’m not even absolutely sure if I asked about pension benefits or Medicare, so I didn’t pursue it.
@heidi – There’s a link from this page to both the Treaty and the Technical Explanation.
https://www.irs.gov/Businesses/International-Businesses/Switzerland—Tax-Treaty-Documents
Good luck! Be very interested to hear what they say!
Hello badger, I’m leaving Badger behind!
Hi pacifica777, I think I’ve changed my screen name!
@iota
Will keep you updated 🙂
@Artfulbadger, thanks, and welcome!
@maz57 or whoever knows:
Do you know the minimum # of quarters one needs to have worked in order to be eligible for SS?
Also, does the Windfall Elimination Provision (WEP) come into play somehow?
TIA
@JimR
40 quarters, over a min of 10 yrs, but as iota said, if you do not have sufficent and are in a country which has a totalization agreement, you can have those years count towards your other countries benefits.
@Heidi, @JimR –
It’s the other way round: if you don’t have enough US credits to be eligible for a pension, your working years in Country X can be counted to bring you up to the US minimum so that you get a small US pension, in addition to whatever Country X pension you’ve earned.
If you don’t have the minimum Country X credits to get a Country X pension, your US working years can be counted to bring you up to the minimum so that you get a Country X pension in addition to whatever US SS pension you’ve earned.
It’s not logical, but for once US illogicality works in the subject’s favour.
Totalization benefits aren’t subject to the WEP. Only SS pensions based entirely on SS credits are subject to the WEP. There’s a calculator on the SSA website you can use to estimate how your SS pension will be reduced by the WEP.
@iota
Oops Typo, that’s what I meant, my last line should have read, ” count towards your US benefits” But I guess it can work both ways.
So much to learn, so little time….. 🙂
.
@iota
If you are a NRA living abroad, how would they know that you have a wep unless the source originates in the US?
@heidi – I was asked during the telephone interview whether I was receiving a UK State pension. I assumed it was standard procedure for all SS applicants to be asked whether they had any pension on which SS taxes had not been paid, but I don’t know for sure.
Doesn’t the wep kick in if any other income is being earned. So if you were receiving a full SS pension but you were a NRA and earning from a part time locum or job in your country of residence, how would SSA know that if you were no longer a US citizen and were no longer sending any tax returns to the US ? Perhaps SS ask you intermittently?
No, you only get WEP’ped if you’re receiving or entitled to receive a pension for which SS employment taxes have not been paid. Does not apply to Totalization benefits.
@Iota
OK, if I was resident in the US receiving my SS benefit, I understand that I could earn the equivalent of my benefit (paying full SS taxes on that income) without any deductions. BUT if I earn 2$ over my benefit, they will then deduct a dollar from every dollar I earn over the benefit.
(We have friends in the US, who are carefull not to earn over their benefit. I am surprised that this does not extend to NRA’s, receiving SSA abroad, but also earning in their retirement.
No not at all. That’s not WEP. WEP is calculated, if applicable, when you start claiming the SS.
OK. Thanks.
I misunderstood, thought that was WEP.
Do you know what the term is for the situation I described and if/ how it applies to NRA’s.
It does not affect me, I have hung up my tools for good, but I often wondered if/how that situation affects expats
@Iota or anyone else……
I have 40 quarters plus of coverage in the USA for social security.
In the UK because of voluntary payments, employment etc etc I will have 30 years of credit for a full state pension.
From what I reading even though I am getting what I in fact paid into, I am going to get penalized by the USA with this thing called WEP??
OK, if I apply for social security at 62 but the UK pension does not start until 67, do you tell the USA you are not receiving a UK pension because you are then not eligible?
@heidi – (assuming it was you that posted that – definitely wasn’t me 🙂 – I don’t know. It’s US source income so I assume they can do whatever they like.
@iota
That’s odd, there were two posts from you listed after my post, but none showing up when opened ? Not sure what/ who posted.
@george
You are fully entitled to both, you paid into them!
I know many who get both with no probs.