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  1. #1
    Join Date
    Mar 2016
    Posts
    2

    Default Social Security Retirement Benefits Reduced Due to Receipt of Foreign Benefits

    Hello, I'm a naturalized US citizen, currently retired and living in the US. I have been receiving Social Security benefits for the years worked in US for about 2 years now. I also worked in my country of origin for many years and receive the corresponding social security benefits from them over there, for the years worked (For information purposes, there is a dual nationality agreement between US and my country of origin).

    I recently received a letter from the U.S. Social Security Administration saying that my US benefits would be reduced by 40%, based on the benefits received from my country. They also said that this would be a retroactive measure, and that I must return to them the amount "overpayed" to me for the last 2 years, according to their new calculations.

    I paid all my payroll taxes here and all my payroll taxes over there, "to each his own" so to speak, based on years worked, income earned, and their correspondent taxes. Now, my question is, is it correct (or legal) for the SSA to reduce my benefits by a staggering 40%, based on a foreign benefit that has nothing to do with my worked and taxed years in this country, which have all been taxed and paid properly according to US requirements?? I mean, how can it be legal for them to take away from my benefits earned legally and correctly in the US, when the taxes were paid in full for that amount of years worked?? They are taking away my money earned for working a specific number of years here... whether I worked in another country or receive money from other country does not, and should not, change the fact that I worked and paid taxes for that specific amount of years I'm receiving benefits for! The years worked and amount paid in taxes to the US is exactly the same, regardless... so, again, is this reduction legal?? Is there something I can do to fix this?

    Sorry for the long read. Thanks in advance for any insight/help you might provide me on this matter!!

    -Sam.

  2. #2
    Join Date
    Mar 2013
    Posts
    17,616

    Default Re: Ss Benefits Reduced on Account of Foreign Benefits

    Quote Quoting JPGJ47
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    I paid all my payroll taxes here and all my payroll taxes over there, "to each his own" so to speak, based on years worked, income earned, and their correspondent taxes.
    Well, the first thing you have to understand is that what you put in to the Social Security system in the US has nothing to do with the amount of your benefits that you receive.

    Quote Quoting JPGJ47
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    Now, my question is, is it correct (or legal) for the SSA to reduce my benefits by a staggering 40%, based on a foreign benefit
    Yes.

    U.S Social Security retirement or disability benefits may be determined using a different formula under the Windfall Elimination Provisions (WEP), when you also receive a pension based on employment or self-employment, (employment, meaning work) from a foreign pension not covered by U.S. Social Security. Social Security benefit amounts use only earnings covered under Social Security with a benefit formula that gives proportionately higher amounts to workers with low lifetime earnings. A worker with a substantial period of non-covered work during their lifetime appears to have lower lifetime earnings than they actually had. WEP reduces the primary insurance amount upon which benefits are based and affects all benefits paid on that record except survivors. The difference in U.S. Social Security benefits computed under WEP cannot be greater than one-half the amount of the non-covered pension received in the first month you are entitled to both the non-covered pension and the U.S. Social Security benefit.

    I got that from the following form:

    https://www.ssa.gov/forms/ssa-308.pdf

    There is probably more information on the SSA website.

    Quote Quoting JPGJ47
    View Post

    based on a foreign benefit that has nothing to do with my worked and taxed years in this country, which have all been taxed and paid properly according to US requirements?? I mean, how can it be legal for them to take away from my benefits earned legally and correctly in the US, when the taxes were paid in full for that amount of years worked?? They are taking away my money earned for working a specific number of years here... whether I worked in another country or receive money from other country does not, and should not, change the fact that I worked and paid taxes for that specific amount of years I'm receiving benefits for! The years worked and amount paid in taxes to the US is exactly the same, regardless... so, again, is this reduction legal?? Is there something I can do to fix this?
    You must really be confused as you are writing the same thing over and over again. The answer is yes, it's legal, and no, there's nothing you can do to fix it.

    By the way, that form seems to imply that you had to disclose your foreign benefits when you first applied for social security in the US.

  3. #3
    Join Date
    Mar 2016
    Posts
    2

    Default Re: Ss Benefits Reduced on Account of Foreign Benefits

    Thank you for your quick response, adjusterjack, it clarified most of the doubts I had!

    Quote Quoting adjusterjack
    View Post
    you had to disclose your foreign benefits when you first applied for social security in the US.
    At the time of application I was still self-employed in my country. I mentioned this to the social security officer who helped me with the application back then, and she said that I should notify the administration once I retired in my country. I did so this year, and I guess that's why I received the letter saying they've applied a 40% discount for the whole time of received SS benefits. Would have been nice of them to say in advance that I might have to return almost half the money, which barely helps me cover my monthly rent as it is!

    In light of your answers, I would also like to ask you if any additional income I might receive in the future from my country, not derived from work nor related to foreign SS benefits, but from future, owned-property rental, should be reported to the SSA, and if that would further reduce my US benefits?

    Thanks, again, really appreciate your time!

  4. #4
    Join Date
    Mar 2013
    Posts
    17,616

    Default Re: Ss Benefits Reduced on Account of Foreign Benefits

    Quote Quoting JPGJ47
    View Post

    In light of your answers, I would also like to ask you if any additional income I might receive in the future from my country, not derived from work nor related to foreign SS benefits, but from future, owned-property rental, should be reported to the SSA, and if that would further reduce my US benefits?
    No. Rental property income does not have to be reported as it occurs nor does it reduce your retirement benefits.

    However, depending on how much income you derive, it could make your SS benefits taxable on a sliding scale depending on the amount.

    Chapter 18 of the SSA handbook explains how wages and self-employment earnings affect your benefits.

    https://www.ssa.gov/OP_Home/handbook...ook-toc18.html

    Pages 29 and 30 of the IRS Form 1040 Instructions explain how Social Security benefits become taxable depending on other income:

    https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

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