Just a couple of small points
1. You only get WEP'd if you have fewer than a particular number of qualifying years, 30 as I recall. They are 'qualifying' by virtue of the amount of money you made in that year. The SSA sets the amount. I missed qualifying in one year by 50 cents.
2. You get WEP'd when your employer hasn't paid into the Social Security system. Many Education departments of many US states have a deal not to pay their part of social security , so millions of teachers are astonished when they get WEPd.
3. If you have a foreign pension, when you apply for Social Security benefits and are WEP'd, the exchange rate become extremely important, The calculation is done at that point, for the remainder of your life, at that day's rate of exchange. I would learn about how they make their calculations in advance (from the SSA)
4. You might find it better to deal with the SSA in Baltimore rather than the FBU at the Embassy. There's a department that handles foreigners.
5. As has been pointed out, you can get both Social Security and the UK State Pension under the Totalization Agreement.The international division of the UK Pension office can figure it out for you what you'll get. If you don't claim it when you become eligible, it piles up and you get arrears in a lump sum
6. All of this becomes tricky in terms of timing - if you get too much at once, it can push you up into a higher tax bracket for either US or UK tax. Best to start early finding out about all of it so you can (try to) control it.
1. I mentioned 30 years in reply no. 5, but assumed no need to reiterate it in reply no. 14. Apologies to anyone missing it in the earlier post. I believe your story about the 50 cents! I'd add for anyone applying for SSA benefits and reporting any foreign pension: the SSA will want to know the exact amount to the nearest pence, Euro cent, or whatever.
2. -
3.
An excellent point and one worthy of note for those who haven't applied yet.4. Now this is intriguing. I do not doubt the statement, but I'm curious as what the difference might be?
5. -
6. Just a tip (IMHO) for those who haven't retired yet concerning your US tax position. As many may know, if you take redundancy in the UK at the time of early retirement, you may automatically receive the first £30,000 tax free in the UK. Reporting it on your US return is an entirely different matter. Additionally, lump sum payouts from pension plans have their own unique complexities. I feel you should thoroughly understand your position before you proceed.
I'll add this: When I first came abroad, I used Form 2555. But as things progressed (and exchange rates), I had to use Form 1116 (General) as well. Challenging, but still not that difficult. Then AMT reared its ugly head, as well as Schedule D. Any mere mortal attempting to understand the relation between 1116, AMT Form 6251, 1116AMT, and schedule D may find their ability to comprehend the English language severely challenged. I hoped it might become easier when I retired. With the tax treaty, it's become even more difficult. I have sympathy for the USC pensioner, resident abroad, who may have lost their ability to stay on top of all this, and cannot afford an advisor. In my opinion, it’s grossly unfair.
Some procedures concerning the reporting of various circumstances and completion of 1040 by a USC pensioner resident abroad are simply NOT covered in
any IRS publication (some relating to SSA payments). And one last observation: when the treaty becomes involved, the normal downloadable tax software packages that I've played with were for me, useless. (I would guess due to the many variances in all the different US treaties.) I would be most interested if anyone has had a different experience.
