retirement Outside the US More Rhetoric than Reality

[Free_at_49]

As a full-time EU resident I would become taxable there on my worldwide income, so if I renounce my US citizenship...

-- Will I loose the Social Security payments to which I’m entitled?

-- Can I still keep my US IRA generating US income? I think it’s too expensive to cash out a large IRA due to income tax.

-- Will I still be eligible for Medicare should I choose to travel to the US?

Anybody with personal experiences?

 

[Alan]

As a full-time EU resident I would become taxable there on my worldwide income, so if I renounce my US citizenship...

-- Will I loose the Social Security payments to which I’m entitled?

-- Can I still keep my US IRA generating US income? I think it’s too expensive to cash out a large IRA due to income tax.

-- Will I still be eligible for Medicare should I choose to travel to the US?

Anybody with personal experiences?

No personal experience other than as a USA resident paying into SS and 401k and IRA's for many years before I became a US citizen.

AFAIK, SS and IRA's should be no problem if you renounce citizenship and reside overseas, but not Medicare. For Medicare, citizenship is not required but you need to be a US resident.

Medicare.gov - Medicare Eligibility Tool (General Enrollment)

 

[Free_at_49]

No personal experience other than as a USA resident paying into SS and 401k and IRA's for many years before I became a US citizen.

AFAIK, SS and IRA's should be no problem if you renounce citizenship and reside overseas, but not Medicare. For Medicare, citizenship is not required but you need to be a US resident.

Medicare.gov - Medicare Eligibility Tool (General Enrollment)

Thank you. So they'll pay Social Security to non-citizens? That's good. And on my IRA income I'll be taxed as a non-resident alien? I'd cash it out, but income tax on ½-milion+ would be confiscatory.

 

[Alan]

Thank you. So they'll pay Social Security to non-citizens? That's good. And on my IRA income I'll be taxed as a non-resident alien? I'd cash it out, but income tax on ½-milion+ would be confiscatory.

That is how I understand it. If you are resident in a European country they may well have a tax treaty with the USA so that you won't be double taxed. In fact, before giving up your US citizenship to avoid taxes, I would first research the tax treaty between your intended country of residence and the US.

You may want to read this thread from a couple of years ago.

http://www.early-retirement.org/forums/f29/giving-up-us-citizenship-50055.html

 

[theOAP]

Thank you. So they'll pay Social Security to non-citizens? That's good. And on my IRA income I'll be taxed as a non-resident alien? I'd cash it out, but income tax on ½-milion+ would be confiscatory.

If you intend to renounce US Citizenship, I assume you will have a second citizenship. The US won't let you renounce unless you do.

When attempting to renounce US citizenship, and if your assets are above a certain level, you'll be taxed by the IRS on your (taxable) assets before you're allowed to renounce.

If you're resident abroad, you can enroll in both Medicare Parts A and B if you qualify. But as you indicate, you can only use it when you are in the US, and at no time in the EU.

https://questions.medicare.gov/faq.php?id=5007&faqId=3971

(US citizenship is not required IF you qualify for Medicare.)

 

[Alan]

If you're resident abroad, you can enroll in both Medicare Parts A and B if you qualify. But as you indicate, you can only use it when you are in the US, and at no time in the EU.

https://questions.medicare.gov/faq.php?id=5007&faqId=3971

(US citizenship is not required IF you qualify for Medicare.)

Are you certain that this is true of non-US citizens who are not residents in the USA? The Medicare site seems to indicate otherwise.

I added the bold in the quote below which says you have to be a US citizen if you are not resident in the US:

Generally, you are eligible for Medicare if you or your spouse worked for at least 10 years in Medicare-covered employment and you are 65 years or older and a citizen or permanent resident of the United States. If you aren’t yet 65, you might also qualify for coverage if you have a disability or with End-Stage Renal disease (permanent kidney failure requiring dialysis or transplant).

 

[theOAP]

Are you certain that this is true of non-US citizens who are not residents in the USA?

Generalities will never cover all of this )) but yes, from personal experience, a non-US citizen who has never lived or worked in the US (and still doesn't) can receive US Social Security. It's the "or your spouse" that's the qualifier. From that situation, they are then qualified for Medicare (if the spouse is qualified). In the case I'm familiar with, it's due to the Totalisation Agreement'. Without an agreement, then no, a person 'may' not qualify.

As I said in the thread on Dual Citizenship, that's why it's most important to do some heavy research all aspects of moving abroad, being employed abroad, or renouncing. There is a great deal of information that's not available on the 'general' sites, which is why I keep stressing the 'if you qualify'.

 

[Alan]

Generalities will never cover all of this )) but yes, from personal experience, a non-US citizen who has never lived or worked in the US (and still doesn't) can receive US Social Security. It's the "or your spouse" that's the qualifier. From that situation, they are then qualified for Medicare (if the spouse is qualified). In the case I'm familiar with, it's due to the Totalisation Agreement'. Without an agreement, then no, a person 'may' not qualify.

As I said in the thread on Dual Citizenship, that's why it's most important to do some heavy research all aspects of moving abroad, being employed abroad, or renouncing. There is a great deal of information that's not available on the 'general' sites, which is why I keep stressing the 'if you qualify'.

I already agree with the SS aspect, my doubt is Medicare.

Fee_at_45 is talking about himself (no US spouse mentioned) being a non-citizen, non-resident living abroad, having access to Medicare when he visits the USA. Do Totalization agreements cover receiving Medicare when you visit the USA? - you may be correct.

As I said, above, lots of research needed before renouncing citizenship to save on taxes.

 

[theOAP]

Sorry Alan, I was responding to the generality that Medicare is not available if you are not a US citizen or resident in the US.

Free_at_49 will have to take the advice we've both given, which is to do the reasearch as it applies to the EU country they are considering. If it were me, I would be investigating eligibility for US SS given their proposed situation, and follow on with the Medicare aspect. If they meet the contributory qualifications for Medicare (if not age) before they renounce, then I would certainly be questioning the Social Security Administration as to qualifying for it from that particular EU country. There are different (and unique) Totalisation agreements for each of the EU countries that have an agreement with the US.

 

[MichaelB]

Generalities will never cover all of this )) but yes, from personal experience, a non-US citizen who has never lived or worked in the US (and still doesn't) can receive US Social Security. It's the "or your spouse" that's the qualifier. From that situation, they are then qualified for Medicare (if the spouse is qualified). In the case I'm familiar with, it's due to the Totalisation Agreement'. Without an agreement, then no, a person 'may' not qualify.

As I said in the thread on Dual Citizenship, that's why it's most important to do some heavy research all aspects of moving abroad, being employed abroad, or renouncing. There is a great deal of information that's not available on the 'general' sites, which is why I keep stressing the 'if you qualify'.

I can't find the link but I recall reading that surviving spouses must have lived in the US for 5 years to be eligible for survivors benefits.

 

[theOAP]

Ahhh....now we're getting to the real depths of the rules and regulations.

If I remember correctly (and my memory is always subject to a government health warning), much depends on whether or not the 'US Person' side of the marriage was already receiving the US SS benefit. Certainly according to the Federal Benefits Unit at the local US Embassy, if the 'US Person' side is already receiving SS benefits, then the surviving NRA spouse will recieve a US SS benefit regardless, and the survivours benefits will be the original pre-WEP figure, not the reduced figure the US spouse was receiving at time of death (if they had been WEPed). My NRA spouse knows this, and I live in fear. As it pertains to Medicare, I have no idea.

 

[theOAP]

I can't find the link but I recall reading that surviving spouses must have lived in the US for 5 years to be eligible for survivors benefits.

Just to follow up on your comment, I've been searching through the SSA site for clarification.

Social Security Publications

In the above link, in the drop down, "Additional residency requirements for dependents and survivors", you will find this sentence:
"If you are not a U.S. citizen, you must have lived in the United States for at least five years."

In the last paragraph in this section, you will find the following:
"The residency requirement will not apply to you if you meet any of the following conditions:
(Four are listed, with the last two being)
You are a citizen of one of the countries in Country List 1; or
You are a resident of one of the countries with which the United States has a social security agreement in Country List 3."

What is most interesting is the shift from 'citizen' in List 1 to 'resident' in the List 3. As you know, they are not the same.

 

[MichaelB]

Just to follow up on your comment, I've been searching through the SSA site for clarification.

Social Security Publications

In the above link, in the drop down, "Additional residency requirements for dependents and survivors", you will find this sentence:
"If you are not a U.S. citizen, you must have lived in the United States for at least five years."

In the last paragraph in this section, you will find the following:
"The residency requirement will not apply to you if you meet any of the following conditions:
(Four are listed, with the last two being)
You are a citizen of one of the countries in Country List 1; or
You are a resident of one of the countries with which the United States has a social security agreement in Country List 3."

What is most interesting is the shift from 'citizen' in List 1 to 'resident' in the List 3. As you know, they are not the same.

That's the link. Thanks, I bookmarked it for future reference.

So, getting back to the OP, a US citizen eligible for SS renounces their citizenship and relocates abroad can still expect to receive SS as long as they become citizens or residents of and reside in one of the countries listed in the SS pub. Their dependents and survivors are subject to more strict requirements.

 

[theOAP]

....a US citizen eligible for SS renounces their citizenship and relocates abroad can still expect to receive SS as long as they become citizens or residents of and reside in one of the countries listed in the SS pub.

Almost there, but not the full brass ring (we're splitting hairs here ). If the person who renounces qualifies for US SS (under the normal 40 quarters/10 substantial years rule), there is no restriction on their new location (except for where the payments are sent in some instances). If it's by a Totalisation agreement, they must live in one of the 24 co-signing countries. It's the dependents and survivors of that person who must be citizens or residents in one of the countries in the above lists if they wish to benefit in any way from US SS, and have not lived in the US for 5 years.

 

[MichaelB]

Almost there, but not the full brass ring (we're splitting hairs here ). If the person who renounces qualifies for US SS (under the normal 40 quarters/10 substantial years rule), there is no restriction on their new location (except for where the payments are sent in some instances). If it's by a Totalisation agreement, they must live in one of the 24 co-signing countries. It's the dependents and survivors of that person who must be citizens or residents in one of the countries in the above lists if they wish to benefit in any way from US SS, and have not lived in the US for 5 years.

Not splitting hairs at all - an important distinction.

 

[Free_at_49]

Thank you. My wife was US citizen too, she died young so I am “surviving spouse” for most official purposes. And yes I’ve lived here long enough to qualify for anything...

My Medicare question was mostly academic, I would not be interested in traveling to the US for “free” healthcare since I can get much better in EU or Canada. I was mostly curious to see if the law punishes those that renounce US citizenship by denying them things that they are otherwise entitled to, or through other punitive taxation/confiscation. But it looks like you can collect your SS at 67 regardless of your status or place of residence. I’m already gonna have to forfeit my Canadian social security, because due to treaties I can collect the larger of the two but not both.

If I do renounce, I won’t be able to run my US business from overseas, so the 89 people that it employs will be affected more than I. Or I could stay here as an alien. Or if I could transfer ownership of my IRA to someone in exchange for cash I’d avoid the 50% exit tax. Lots of possibilities..

 

[NYEXPAT]

As a full-time EU resident I would become taxable there on my worldwide income, so if I renounce my US citizenship...

-- Will I loose the Social Security payments to which I’m entitled?

-- Can I still keep my US IRA generating US income? I think it’s too expensive to cash out a large IRA due to income tax.

-- Will I still be eligible for Medicare should I choose to travel to the US?

Anybody with personal experiences?

Just curious, (if you care to disclose) what benefits are there in giving up citizenship? I get the part about living and having your assets off shored, but I really think multiple passports is always better than one?