Social Security questions

There are some free calculators available for estimating how much you and your spouse would get while claiming at differing ages.

https://money.usnews.com/money/retirement/social-security/articles/2017-01-23/6-social-security-calculators-that-can-help-you-decide-when-to-claim

Spouses who have never worked are entitled to up to half what the working spouse receives, depending on when the claim is made. The example below is for a husband who has never worked but his wife has.

https://www.schwab.com/resource-center/insights/content/yes-there-are-retirement-benefits-for-a-non-working-spouse

Spouses can collect Social Security benefits
The short answer to your next question is that yes, a nonworking spouse who has reached age 62 can collect Social Security benefits based on the working spouse’s earnings record once the working spouse has filed for benefits or once the working spouse has reached their full retirement age (FRA).

This sounds clear enough, but there are a number of rules and exceptions to think about.

What and when a nonworking spouse can collect
The Social Security benefit of a nonworking spouse is up to 50 percent of the working spouse’s FRA benefit. (FRA is 66 for those born between 1943 and 1954.) So if your FRA benefit is $2,000 per month, your husband would be able to collect up to an additional $1,000. Once you file (or reach your FRA), your husband can:

Take Social Security right away. However, filing before his FRA will permanently reduce his spousal benefit.
Wait until FRA in order to receive his full spousal benefit, which is 50 percent of your FRA benefit.

For our particular situation my wife worked a lot fewer years than myself and subsequently her SS benefits are a lot lower than mine, less than half. I am 9 months older than my wife.

Once she reaches FRA at age 66 and 2/3rds she will claim for SS and she will get an additional sum to ensure she gets half of my SS at my FRA.  Claiming earlier will permanently reduce the maximum she can claim.

Since she is younger than me, super fit and comes from a long-lived family I plan on claiming SS at age 70 which is the maximum benefits I can get.  When a person dies the surviving spouse gets the higher of the benefits. If I die first then my wife's SS will get boosted up to what benefits I was receiving, so for us it is an insurance policy me waiting until age 70.

A related question while I'm waiting for the FBU.  Seeing as they said it could take upto 6 months to start paying, but that it would be backdated, I'll likely get a 6 month lump sum in UK tax year 2020-21 (say June 2020).  Some of that, say 3 months worth, would be for payments that I should have received in UK tax year (2019-20).  I know it's a way off, but how would I report that on my UK tax returns.  I'm guessing it will all have to be reported as income in 2020-21, because that's when it was received, even though some of it should have been for 2019-20.  Anyone know for sure?

I think you are correct that money received in the tax year cannot be reallocated back to a previous tax year even if it is a delayed payment.

Finally!  So, about 10 or 11 months after I first contacted the FBU, I've had my first payment - the backdated amount to Jan 2020.  Normal monthly payments will start in June.  It took 4 months from when I had my telephone interview - they'd warned me it could take 6 months - but in all fairness, I thought in the circimstances it might take longer.  Chuffed as beans!

Finally!  So, about 10 or 11 months after I first contacted the FBU, I've had my first payment - the backdated amount to Jan 2020.  Normal monthly payments will start in June.  It took 4 months from when I had my telephone interview - they'd warned me it could take 6 months - but in all fairness, I thought in the circimstances it might take longer.  Chuffed as beans!

Excellent news, thanks for this update.

Just had a disturbing conversation with an ex-colleague of mine who worked in Germany for a few years a long time ago.  When she retired she was pleasantly surprised to learn that she was entitled to a German state pension - albeit a very small amount.  Despite reporting that income on her UK tax return every year, and paying tax on it, she's now been contacted by the Germans to say that she should have been paying tax in Germany on it all along.

I'm amazed - I always assumed that you'd be taxed where you were tax resident.  But it's made me think about my newly received US state pension.  I've assumed that it'll only be taxed in the UK.  Is that correct?

Just had a disturbing conversation with an ex-colleague of mine who worked in Germany for a few years a long time ago.  When she retired she was pleasantly surprised to learn that she was entitled to a German state pension - albeit a very small amount.  Despite reporting that income on her UK tax return every year, and paying tax on it, she's now been contacted by the Germans to say that she should have been paying tax in Germany on it all along.

I'm amazed - I always assumed that you'd be taxed where you were tax resident.  But it's made me think about my newly received US state pension.  I've assumed that it'll only be taxed in the UK.  Is that correct?

You are correct. The Double Taxation Agreement between the UK and USA states that  US SS is only taxed in the UK. However UK OAP is taxed in both US and UK.

You are correct. The Double Taxation Agreement between the UK and USA states that  US SS is only taxed in the UK. However UK OAP is taxed in both US and UK.

Thanks.  Slightly flabberghasted by your last sentence though!  Is that peculiar to dual citizens or something?  It would be slightly bizarre if I only pay tax in the UK on my 401k withdrawals and US state pension, but US tax on my UK OAP.

Do you have a link to somewhere that explains this?  Or is it buried in the DTA?

Thanks.  Slightly flabberghasted by your last sentence though!  Is that peculiar to dual citizens or something?  It would be slightly bizarre if I only pay tax in the UK on my 401k withdrawals and US state pension, but US tax on my UK OAP.

Do you have a link to somewhere that explains this?  Or is it buried in the DTA?

It is in the DTA, and only applies to US citizens living in the UK. The US taxes its citizens on their worldwide income no matter where they live, an exception being SS for some bizarre reason.

It is in the DTA, and only applies to US citizens living in the UK. The US taxes its citizens on their worldwide income no matter where they live, an exception being SS for some bizarre reason.

Ah, thankfully doesn't apply to me.