Filing UK Tax for US Soc Security Income

I first posted a few years back, in total panic over filing questions and FBAR for the US taxes.  I received excellent advice.  Now the panic is gone.

However, now that I've started drawing US Social Security a new twist has been introduced.  Mistakenly I elected to have tax withheld from my SS payments, and accordingly had to identify the payments on last year's 1040.  Now I fully understand that I should not have tax withheld and furthermore shouldn't identify SS as income on my 1040.  Instead I should be filing with the UK specifically (and only) for my US SS income.

My main question is how do I start the ball rolling on the UK side?   Do I  out of the blue start submitting Self Assessment form to the UK?   

Anyone out there have experience I this area?  Your advice will be most appreciated.

Thanks,
CFL

My main question is how do I start the ball rolling on the UK side?   Do I  out of the blue start submitting Self Assessment form to the UK?   

You should sign up for self assessment.

You should sign up for self assessment.

+1

It is pretty easy to do this (at least I found it easy to do last year when my wife and I each registered and then received our UTR numbers from HMRC)

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-not-self-employed

Nun & Durhamlad,

Once again I can't believe how great this site is.  I barely had the question out there and you both came back to me.  Fantastic!!

Most, most, most appreciated,
CFL

Nun & Durhamlad,

Once again I can't believe how great this site is.  I barely had the question out there and you both came back to me.  Fantastic!!

Most, most, most appreciated,
CFL

You are most welcome. 

I am just coming to the end of my first UK tax year and will be filing for the 16/17 tax year probably in December so I'll know what what tax credits to apply on my 2017 US return.  This is all new to me and everything I know comes from the internet, this site in particular.

Are your SS payments deposited into a nominated UK bank account? That makes it easy to determine the value in £ for the UK self-assessment.

Also, for the new 2017/18 tax year, 100% of the SS benefit is subject to reporting/tax in the UK. For prior years, it was 90%. When you file your 2016/17 self-assessment, make sure you utilize that little break. The on-line form does NOT automatically calculate it - you enter the 90% value, not the full 100%.

Vadio,

Excellent bit of info!!

I am assuming that because I've already paid US taxes on my SS for 2016 that I will have to do a partial claim for the UK reporting for 2016/2017, due to the overlap in reporting periods.  Correct?

And this all should be prepared and submitted at the end of calendar year 2017?

Going to take some getting used to!!
CFL

If you are UK resident (and not claiming the remittance basis) you'd report the income on your UK tax return.

Any US tax withheld for 2016 would be reclaimed from the IRS.

I would file a W-4V to reset your withhold tax on your SS to 0%


Sent from my iPhone using Tapatalk

Nun,

Thanks!!  I'm finally getting the hang of (a bit) it.  Did exactly that a couple of hours ago and mailed it off.

I'm thinking that since UK tax timeframe is April to April I should not file a UK Self Assessment for this past year (2016) since all the taxes would have been paid to the US.  And should start filing in 2018 for 2017.  Or is it file this coming Oct-Dec for 2017???

Did I mention this is going to take some getting used to?!?!

Your advice is much appreciated,
CFL

Are your SS payments deposited into a nominated UK bank account? That makes it easy to determine the value in £ for the UK self-assessment.

Also, for the new 2017/18 tax year, 100% of the SS benefit is subject to reporting/tax in the UK. For prior years, it was 90%. When you file your 2016/17 self-assessment, make sure you utilize that little break. The on-line form does NOT automatically calculate it - you enter the 90% value, not the full 100%.

I have been looking into this recently. Is this definitely the default position in situations where the income is credited in £ within a relatively short time of being paid in the US? if the OP had it paid into a US bank account (or a UK account in USD), how would you then determine the ££ value? Or if you waited 6 months and when you exchanged $$ for ££, you made a "profit" on its ££ worth when originally received?

I thought you had to use HMRC's exchange rates, but then got completely confuzzled because I ended up on pages talking about the exchange rate at date of remittance (?) and exchange rate at date of receipt (?) I think a lot of the information was intended for people doing business with overseas interests, but it seems the same principles would apply to basic people like us getting their pittance from US sources.

FYI, for example: https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2016-monthly

Nun,

Thanks!!  I'm finally getting the hang of (a bit) it.  Did exactly that a couple of hours ago and mailed it off.

I'm thinking that since UK tax timeframe is April to April I should not file a UK Self Assessment for this past year (2016) since all the taxes would have been paid to the US.  And should start filing in 2018 for 2017.  Or is it file this coming Oct-Dec for 2017???

Did I mention this is going to take some getting used to?!?!

Your advice is much appreciated,
CFL

If you were UK resident in 2016-17 any US Social Security pension is completely exempt from US tax; but reportable on your 2016-17 UK return. You would report zero as taxable on the 2016 Form 1040. The 2016 US return is due to be filed with the IRS by 15 June 2017 (not 15 or 18 April 2017). The 2016-17 UK return is due to be filed with HMRC by 31 January 2018. 

I thought you had to use HMRC's exchange rates, but then got completely confuzzled because I ended up on pages talking about the exchange rate at date of remittance (?) and exchange rate at date of receipt (?) I think a lot of the information was intended for people doing business with overseas interests, but it seems the same principles would apply to basic people like us getting their pittance from US sources.

Our SS payment in ££ is the rate 'on the day' - maybe I am over simplifying it, but to me going back to average Fx rates or anything similar is WAY more than HMRC cares about for our pittance. As the SS goes in on the 3rd of the month (unless of course it's a weekend or holiday or whatever), I consider it pretty an arising Fx rate, but you could also logically say it's a remittance Fx rate. Whatever, it's not a mongo payment, and not worth worrying about. If it's being squirreled away in a US bank account, maybe different rules/thought processes will apply.

Our US income at the moment is SS and about $0.45 in interest on the a US account that we get in a year. When I start drawing RMDs from my IRA accounts in another year or so, will have to deal with that income based on my best efforts (and advice from others on how they've done it) in terms of what/how to report on the SA form. Some $$ may physically remain in the US for whatever reason, unless we need the money, but I will still consider it taxable on the arising basis, and probably use the applicable Fx rate in force on the day of 'receipt', or the HMRC rate for the month, or whatever looks right at the time. Still a few months off, and won't be a mongo amount of income anyway.

Guya,

Thanks for you input and clarification.

One issue that comes to mind is I have already had US taxes taken out directly from my SS.  In preparing my 1040 for 2016 I identified the SS income and tax withheld.  If I now complete a UK Self Assessment for 2016/2017 I will surely be taxed twice on the same income.

At this point I have not mailed in my 1040.  Should I therefor redo my 1040 leaving out the SS income?  Is there a method for recouping taxes already paid?  And, if I do this, I would then complete UK reporting the full amount for SS income for Apr 2016 to Apr 2017?

My SS payments go directly into my US bank account.  For my 1040 reporting on items for Foreign Earned interest I was using the Treasury Dept. average exchange rate for the year.  Would that not suffice for the purpose of completing the UK Self Assessment?

Sorry for continuing to ask more questions.  But, perhaps on the good side it might also help others who are reading this and in somewhat similar positions.

As always, your (and all the other gurus on here) advice is most appreciated.
Thanks,
CFL

You must include the US SS on your UK self assessment for any years that you received it while a UK resident as it is UK taxable. So you must pay the UK any tax due. If you have had US tax withheld in error you should claim it back on your 1040. Right now you have not paid any tax....it's just been withheld. So change your 1040 to not include the US SS income; enter the SS amount on line 20a and 0 on line 20b. The tax withheld will go towards your US tax bill and you will get it refunded if you have over paid.