Social Security

This is the first year in the UK that I have earned UK income. I have just finished filling out all the US tax forms (yea me!).....and now I need to I guess think about Social Security.

Here's my situation. I may be self employed or we may consider me an employee, we are waiting to hear from HMRC to see which approach is best for us. We own a Post Office and shop.I have filed my UK taxes as self employeed but are still waiting to hear back on the self employed vs employee thing. To date, I have not paid any National Insurance, since we are waiting to hear back.

My question is: What do I do about Social Security? I would like to continue thru the US Social Security system since I have paid in for a long, long time. What's the procedure for this? Where do I go to get infor on how to do it and can it be done? I haven't even let the SSA know I am abroad...it didn't seem important since last year I was not yet earning UK income and reporting it, but now that I am I need to know. TIA

Scout

Scout - the Post Office & shop in Wales sounds wonderful!

As an employee you (and your British husband) would pay UK NI contributions.  You could not pay into US social security unless/until you work in the States again.

If you are self-employed you would not pay US Self Employment Taxes (the social security paid by the self-employed in the States) because the totalisation agreement  between the 2 countries says you only pay in the country where you ordinarily reside (Wales).

I am a bit puzzled, however, because you must have known if you were employed/self-employed/in partnership or indeed company owners before you filed your 2007 US taxes.  If - for example - you and your husband are partners in an partnership you would have filed Form 8865 along with your 2007 US tax return.  If you run the business through a company you would have filed form 5471.  You would also have disclosed the business on Form TDF90-22.1 and might have disclosed it on several other US tax forms...

Are you runing a franchise?
I would have thought unless you have registered with companies house as a limited company and thus it would make you employees then you would be classed as self employed.

Its a bit weird as you have the post office in some way employing you as a franchise, did the post office not confirm they are your employers?

I would have thought there legal department would have known all the facts on this matter.

Good luck with your work.

Indy

With the Post Office it's a weird thing....part of the time you are treated as an employee and part of the time you are treaated as self employed. we own the Post Office but recieve a paycheck each month from the Post Office......they only thing I can think of in the states that's sort of like it (but really not).....is a sort of agency agreement. It is not a formalized partnership so to speak. When we applied for the Post Office the Post Office choses only one of us to be the Postmaster. Since my husband is British, he's the actual Postmaster and he's the one that get's the paycheck, my name is not on it. Does that make sense?

I run the shop end of the business which while in the same area as the Post Office is separate.

eta....I did receive income from the Post Office end of the business (via my husband) and it was reported to HMRC.
Since there is no formalization of the partnership, I have not filed a form 8865 with my 2007 taxes (which, while I think I am finished with the forms, I haven't mailed them yet). We aren't incorporated either, so I didn't file a form 5471. Should I be filing either of these forms?

I agree - the Post Office - has complicated arrangements!

HMRC explain their view for UK tax purposes here:

 http://www.hmrc.gov.uk/manuals/bimmanual/BIM66301.htm

Seeing that your husband is the Postmaster to my way of thinking the income from that source is strictly only his (not yours).  He could of course pay you to assist him in those duties (so you become his employee) or you could separately have a partnership for the shop.

If the entity is classified as a partnership (even if it has no formal agreement) then a form 8865 is mandatory because the penalties for failure to file at $10,000 a shot are just too high to ignore.

However the US law changed last year so you may (I only say may) have a qualifying joint venture - see here:
http://www.irs.gov/businesses/small/article/0,,id=97732,00.html and:
http://www.irs.gov/businesses/small/article/0,,id=177376,00.html

Hope this helps a bit??

From reading the info it seams I'm going to have to file the partnership form as well. While my husband is the 'boss' so to speak and we could do it as employer/employee.....the Shop side of the business factor's in as well. Plus we filed a Short Partnership form with HMRC although we have asked if this can be changed.

I don't think we can file as  the joint venture thing because while I am married, I file separately since he is a British Citizen and does not file US taxes.

If I file this form as well is this going to change my US tax liability from the zero amount? (I'm printing the partnership tax form as I type).........geeze it's another 7 pages 

OK I know it is a horrid form but it is indeed mandatory; Just bear in mind that the instructions to the 8865 say (at page 10) that this form should take you the following amounts of time to deal with:

Form 8865:
Recordkeeping - 89 hr., 21 min.
Learning about the law or the form - 23 hr., 16 min.
Preparing, copying, assembling and sending the form to the IRS - 36 hr., 26 min.

Schedule K-1 (Form 8865)
Recordkeeping - 10 hr., 31 min.
Learning about the law or the form - 35 min.
Preparing, copying, assembling and sending the form to the IRS - 48 min.

Schedule O (Form 8865)
Recordkeeping - 12 hr., 12 min.
Learning about the law or the form - 2 hr., 22 min.
Preparing, copying, assembling and sending the form to the IRS - 2 hr., 41 min..

Schedule P (Form 8865)
Recordkeeping - 5 hr., 15 min..
Learning about the law or the form - 35 min.
Preparing, copying, assembling and sending the form to the IRS - 42 min.

To summarise, you cannot rush this form as it is highly complex and is designed to be time consuming.  The crucial aim of the 'project' is to get the K-1 correct so that the correct figures carry to Schedule E, form 2555 and form 1116. 

Guya, I am reading the categories of who should file Form 8865 and for the life of me, I can't see me being in any of the 4 categories.

Category 1 -this doesn't apply since I don't own more than 50 %
Category 2 - doesn't apply since the person controlling the partnership is not a US person(s) - my spouse is British not American.
Category 3 - I don't think applies since I didn't purchase a partnership, We founded a business. What is a section 721 transfer? I may fit Category 3.A. but I am totally confused here. I read something about a LLC but we aren't a LLC. We have full personal liability of the business fails.
Category 4 - doesn't apply it wasn't an acquisition, we founded the business. A disposition doesn't apply. I didn't have a reportable event since there was not change since a prior reportable event - there never was a prior reportable event if that makes any sense at all.

Oh man. I have a headache.....and my DH is getting snarky with me.  

I don't see how I would do a K-1 if I definately am not a Category 1 filer. There wouldn't even be a Category 1 filer since it no US citizen is controlling the partnership.

AAAAAArgh..............the times on filling out this form makes me want to take a leap off a high cliff.

Guya, I talked to the IRS today, even they couldn't tell me for sure whether or not to file the form, so to be safe rather than sorry, I'm gonna file it. Near as I and the IRS can figure I am probably a Category 3 filer. Thanks for the heads up, I would have probably just mailed my taxes and not thought a thing about this form. I've looked over most of the form and was saving Schedule O for after I saw what category filer I am. I hope I can get this done in the next two weeks.