US Social Security + foreign pension in country w/ Totalization Agreement

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US Social Security + foreign pension in country w/ Totalization Agreement


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Old 5th July 2019, 12:47 PM
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Question US Social Security + foreign pension in country w/ Totalization Agreement

If anyone out there is receiving a 'coordinated' benefit between the USA and a country that it has a Totalization Agreement with, my question is this: is the amount of the monthly benefit from the foreign country simply deducted from the US monthly benefit, or is it more complicated than that? I've been living overseas for over 20 years and am approaching retirement age. I will qualify for a US Social Security retirement benefit and a smaller one in Spain. I'm planning on remaining in Spain. Thanks, Carlos (aka Carloz)


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Old 5th July 2019, 01:54 PM
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Have moved you over here to the Expat Tax section, which seems to draw its share of US SS questions.

And the answer to your question is (of course) that "it's more complicated than that." Your US SS pension amount is subject to the WEP (Windfall Elimination Provision) - which reduces the amount of your benefit if you are receiving another pension (government type pension) from a source that is not based on US SS.

The calculation is kind of complicated - and depending on how many years you worked in the US, it may alter the amount of the WEP adjustment. For the SSA explanation, start here: https://www.ssa.gov/planners/retire/wep-chart.html

One key thing to remember is that the amount of the WEP reduction is limited to one-half of the amount of your foreign pension. And when you apply to receive your US SS, they will most likely ask you for whatever "entitlement letter" you have showing your initial foreign pension amount(s).

You may find it easier to deal with the Social Security people at your local US Consulate: https://es.usembassy.gov/u-s-citizen...cial-security/
Although they promote the use of those MySocialSecurity online services, you can't open an account with the online service unless you have a US mailing address. It was a couple years ago that I first applied for US SS, but you can initiate your application on the SS website even without having a US mailing address: https://www.ssa.gov/planners/retire/

You may well find that it is significantly easier to deal with the Federal Benefits Unit at the Consulate once your claim has been filed.
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Old 5th July 2019, 01:58 PM
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Quote:
Originally Posted by Carloz View Post
If anyone out there is receiving a 'coordinated' benefit between the USA and a country that it has a Totalization Agreement with, my question is this: is the amount of the monthly benefit from the foreign country simply deducted from the US monthly benefit, or is it more complicated than that?
That’s not what happens.

You should get the full amount (after tax of course) of each pension; but the fact that you will be receiving the non-FICA Spanish pension may result in your US SS pension being reduced (by the US) under the Windfall Elimination Provision.

The SSA has a calculator which can predict (roughly) whether you’ll get a WEP reduction. Search on their website. * The amount being received from the non-FICA pension is not a factor. (Correction: SSA says: “The WEP reduction is limited to one-half of your pension from non-covered employment.”)

* Edit: My post crossed with the post by Bevdeforges, which gives the link.

Look in the US-Spain tax treaty to see which country will tax your US SS pension.
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Last edited by underation; 5th July 2019 at 02:14 PM.
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Old 5th July 2019, 02:32 PM
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Thank you both, Bevdeforges and underation. I had tried the MySocialSecurity online services, but got stalled due to the lack of a US address. I'll check out the links and contact the consulate at the Embassy here in Madrid. Muchas gracias!!!

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pension overseas, retirement, social security, totalization, usa citizen

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