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Ireland Expat Forum

(Paying Taxes in U.S & Ireland)

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richard0412
7/20/2017 06:49 EST

I currently have Irish and US citizenship; my wife only has US citizenship. We are considering moving to Ireland permanently. I have a question concerning taxable income. Would we be responsible for taxes in the US and Ireland? We are both retired and will not be working in Ireland. Our income is a pension, social security and annuities. Concerning social security benefits. If you live permanently outside of the US do would you lose that benefit?

Any help would be appreciated.

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bearcountry
7/20/2017 07:56 EST

You will still get benefits from SS while living outside the US. We live in Costa Rica, have our SS deposited in a US account, and retrieve funds from ATMs. With CapitalOne there are no foreign transaction fees. We still have to file taxes in the US and depending upon your state and situation may also have to file with it. Someone else will have to respond about paying taxes in Ireland.

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Pbrennan
7/20/2017 16:26 EST

Hello,

We are in a similar situation, and I have researched this subject. IRS Puplication 54 is a relevant resourcee. The States and Ireland have an agreement addressing this, which provides the appropriate guidance.

The below links should be useful.

US Embassy Ireland info:
https://ie.usembassy.gov/u-s-citizen-services/internal-revenue-service-u-s-taxes/irs-tax-information/

Technical summary of the "Convention" (agreement):
https://www.irs.gov/pub/irs-trty/iretech.pdf

From the SSA:
https://www.ssa.gov/pubs/EN-05-10137.pdf

Of course, you will need to research for your own situation.

Good luck!

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dave8408e
7/20/2017 18:31 EST

Ireland has an agreement on taxation with the US; you'll pay income tax in the US, or Ireland, but not both. Receiving your Social Security payments in Ireland is simple to arrange and not an issue; there's tens of thousands of American retirees receiving their SS money all over the world.

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richard0412
7/21/2017 00:00 EST

Thank you for the information.

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richard0412
7/21/2017 00:08 EST

Thank you! I will look into what you sent. I appreciate your help.

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KevinfromKinsaleviaNYC
7/22/2017 07:55 EST

These tax treaty and related documents are unfortunately beyond my ability to fully interpret and I have not yet found a tax professional who is fully versed in the subject..

Dave or anyone else, is the paragraph below an accurate description of the tax treatment of US social security of full-time Irish residents?

If you are defined as an Irish resident for tax purposes, Ireland will want to tax all of your income including US social security. Therefore, you must file an Irish tax return and determine your tax liability. Based on the tax treaty, however, any U.S. income tax paid on this income will be treated as a credit against Irish tax. If no US income tax is paid on this income, you must pay the total tax liability based on Irish tax rates.

My estimate of my Irish tax liability shows that I will pay more taxes as an Irish tax resident than as an American tax resident.

I have heard the opposite from some people who have stated that the tax treaty allows you to pay taxes only in Ireland. But I think the reason is simply that the effective tax rates in Ireland are higher than the effective tax rates in the States. So it seems that all Irish tax residents are liable to pay at least some Irish tax.

Does anyone have a different understanding?

Also, if my social security income is direct deposited to an Irish bank, will this information become known to the Irish revenue authorities?

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Meachair54
7/22/2017 12:50 EST

Hello , Kevinfromkinsalevianyc ,
If you look up The U.S. Tax Convention with Ireland under Article 18 you will find the answer to your question.
On the second question of direct deposit of social security check to an Irish bank it will show up as a deposit from the U.S.Govt. , plus the fact of it showing up at the beginning of each month is another sign that you are receiving a S.S. Check from the U.S. , but that is also explained under Article 18 . Hope that helps to answer your questions. Good Luck !!!!

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KevinfromKinsaleviaNYC
7/22/2017 13:40 EST

Thanks, Meachair but you immediately referred me back to the same documents I said I am having problems understanding. I have read Article 18 (and 19) more times than I would like to admit and still do not feel I have the answer I seek. I am sure it is my ignorance of such technical language.

Can someone simply read my summary paragraph and tell me whether the statement is correct or incorrect and if incorrect, why?

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Meachair54
7/22/2017 22:02 EST

Kevinfromkinsalevianyc ,what you first ask about where and how much taxes you will pay on Social Security check ; you will pay the tax to the U.S. Gov't . The other part about tax credits and where you will pay more if you're a resident of Ireland is a different subject altogether ,which refers to people working and paying into the U.S. Or Irish Social Security scheme or both is about where or how much credits you will get toward one or the other Soc. Sec schemes that determines how much a person will receive when eligible for Soc. Sec. In either country . You being a retired U.S. citizen residing in Ireland wouldn't be allowed to work and this wouldn't be a concern for you .

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Joshuak
7/24/2017 07:32 EST

He writes he has Irish citizenship (Dual) so both he and his wife could work once they establish residency. A Irish citizen with proof via passport is almost the same as a natural born Irish citizen and his wife would be given a residency card with a #4 on it which does allow them to work. But maybe they do not want to work. After getting a residence, they both can obtain a Public Service Card and PPS number with perks, and after filling out the application also get free TV license and a monthly allowance on their electric bill. In addition, they qualify for a European Union travel medical card good in all EU countries. They would not qualify for social services payments unless they had employment or Irish income that was taxed in the past. Look at "Citizens Information.ie".

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Joshuak
7/24/2017 09:03 EST

Bearcountry has the best way to handle US income in Ireland or other countries. When you have your Social Security check sent direct to a foreign bank, they deduct a foreign transaction fee from that money and you do not always get the best exchange rate. If you do as he did and have SS check deposited in a US bank such as Capital One 360, USAA Bank, or Ally Bank, you can pull your money from local ATMs in Ireland in Euros and get the best exchange rate and no transaction fees. I used to go to my local AIB bank and use their ATM outside on the wall of their building, then go inside and deposit in my Irish bank account. But if you feel that is too inconvenient, then pay the 3 - 5% more to have it sent direct to the Irish Bank.

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Muddled
7/24/2017 13:06 EST

Citizenship alone will not be adequate for the benefits referred to
http://www.welfare.ie/en/Pages/780_Free-Travel.aspx

The EHIC is only available to residents in Ireland if they are on some sort of social welfare or when the appliant(s) can show they have been contributing to the tax system. You do need a PPSN as well.

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Muddled
7/24/2017 13:09 EST

Sorry, wrong thread!

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Muddled
7/24/2017 13:09 EST

Sorry, wrong thread!

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Muddled
7/24/2017 13:09 EST

Sorry, wrong thread!

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lovelyrita
7/24/2017 16:46 EST

This website has some interesting discussion of the topic: https://www.americansabroad.org/taxation-of-social-security-benefits/

Overall, I think you're right though. If you are resident in Ireland you have to pay taxes on income which includes Social Security income. But as a citizen you'll also be eligible for the different deductions that may apply to your personal situation.

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