DrRick

You really are a great help,,thanks.
Presumably I wouldnt get taxed twice though.( Im not a US citizen) .would I get tax credit in UK for any US tax paid?.Would you suggest I write to a particular unit or just my local office?

nun

For lump sum withdrawals from US qualified retirement accounts the US has the primary taxation authority, whatever you citizenship. If HMRC also chooses to tax that lump sum (definitely nit certain) then you would get credit for any US tax paid.

nun

You might try this web submission first.

Simply state that you are taking a lump sum withdrawal from you US qualified 401k retirement account and that under US/UK Double Tax Treaty Article 17 para. 2 that lump sum is only taxable in the US. Then ask whether HMRC would apply the saving clause of Article 1 para. 4 to also tax that lump sum?

DrRick

Do the IRS always tax withdrawal of any biggish lump sum or just when the account is emptied completely?( ie It is closing the account that triggers this treatment..)..I calculate that US tax is less than UK tax on this amount
......you will understand that I was wondering whether it has to be a full withdrawal of the whole remaining balance to qualify?
I wondered also if I could have the $150k lump sum I took out in December ( to be in the 2016 US tax year) taxed in USA instead of UK..which would be a big improvement!

My UK accountant knows nothing about this ..I take it there are companies in UK that could do all of this for me?

Aoi

It appears that his will happen from 6 April 2017:
https://www.gov.uk/government/public...rseas-pensions

This guidance also includes changes to the taxation of lump sum payments from 6 April 2017.

"If you would like to comment on this draft guidance, please send responses via email: [email protected] by 1 February 2017."

Here is the Double Taxation Relief Manual: Guidance by country: United States of America: Pensions from 2003:
https://www.gov.uk/hmrc-internal-man...elief/dt19876a

nun

Now you've asked the real question, "what is a lump sum". It isn't defined in the treaty. For the IRS a lump sum is the entire balance of an account. The term is usually used in connection with "lump sum payouts" from annuities or defined benefit pensions. If you do empty the account I think you are safe in assuming that both the IRS and HMRC will treat the payment as a lump sum.

A single large payment less than the entire balance will be treated by the IRS and you US administrator as a non-periodic payment.

DrRick

I am ..it seems wiser.. on the closing out of my 401K. thanks for the advice...I will leave it a while.

However,as I mentioned, in December 2016 I took out an amount and was taxed 30% witholding in USA.

I now wish to declare this for tax in UK and under the tax treaty re claim the US witholding tax.

May I seek advice again? I assume I just complete a 1040NR and that this should be simple.... with just one line of income?

Do I just put the amount from box 2 of the 1042-S in box 17a and the witheld tax from box 7a of the 1042-s in box 62d?

and then Do I also add a Schedule OI ?..which presumably will let the IRS know that this is under the tax treaty....Which Tax Treaty article should I cite?

Finally I have a second 1042-S for income that was not taxable (presumably the original investment) do I mention this too?
Thanks for any help