UK Pensions related to UK/US Tax Treaty
Mar 26th 2017, 2:45 pm
#1
Just Joined
Thread Starter
Joined: Mar 2017
Posts: 11
UK Pensions related to UK/US Tax Treaty
Hello All,
I just joined the Expats today and I need some help.
I am very confident that someone will know the answers to my question.
I am a 66 yrs old male and permanent resident of the US (>20 yrs)
As a British Citizen I worked in the UK for >20 yrs and claimed my UK Company pension on March, 2016 as I turned 65 yrs.
In accordance with UK pension rules I opted for the 25% tax-free "lump sum" and a reduced monthly pension payment.
I filed my 2016 on Feb, 2017 and did not include my UK pensions as I believed that they were tax free. However, I now understand that I will need to resubmit an amended US Tax return to include my UK pension plus complete a FBAR since the total amount >$50,000.
The UK/US Tax treaty is very complex and a US Tax attorney advised me that I do not need to pay US tax on the 25% partial distribution "lump sum" as this fall under Article 17, 1 (a) and/or (b) and not Article 17, 2 which covers lump sums and is subject to the Article 1 (4) under the Savings Clause.
However, my interpretation of Articles 17, 1 (a) and (b) are that I would be excluded from US tax if I were a UK resident - at least for the year 2016 when I received my payment.
My interpretation is not in agreement with advice from a US Tax attorney so I am totally confused and would appreciate any feedback on this very complex subject.
Thank you.
I just joined the Expats today and I need some help.
I am very confident that someone will know the answers to my question.
I am a 66 yrs old male and permanent resident of the US (>20 yrs)
As a British Citizen I worked in the UK for >20 yrs and claimed my UK Company pension on March, 2016 as I turned 65 yrs.
In accordance with UK pension rules I opted for the 25% tax-free "lump sum" and a reduced monthly pension payment.
I filed my 2016 on Feb, 2017 and did not include my UK pensions as I believed that they were tax free. However, I now understand that I will need to resubmit an amended US Tax return to include my UK pension plus complete a FBAR since the total amount >$50,000.
The UK/US Tax treaty is very complex and a US Tax attorney advised me that I do not need to pay US tax on the 25% partial distribution "lump sum" as this fall under Article 17, 1 (a) and/or (b) and not Article 17, 2 which covers lump sums and is subject to the Article 1 (4) under the Savings Clause.
However, my interpretation of Articles 17, 1 (a) and (b) are that I would be excluded from US tax if I were a UK resident - at least for the year 2016 when I received my payment.
My interpretation is not in agreement with advice from a US Tax attorney so I am totally confused and would appreciate any feedback on this very complex subject.
Thank you.
Mar 26th 2017, 4:08 pm
#2
Concierge
Joined: May 2006
Location: ex ex-pat, in Taunton
Posts: 27,213
Re: UK Pensions related to UK/US Tax Treaty
Hello All,
I just joined the Expats today and I need some help.
I am very confident that someone will know the answers to my question.
I am a 66 yrs old male and permanent resident of the US (>20 yrs)
As a British Citizen I worked in the UK for >20 yrs and claimed my UK Company pension on March, 2016 as I turned 65 yrs.
In accordance with UK pension rules I opted for the 25% tax-free "lump sum" and a reduced monthly pension payment.
I filed my 2016 on Feb, 2017 and did not include my UK pensions as I believed that they were tax free. However, I now understand that I will need to resubmit an amended US Tax return to include my UK pension plus complete a FBAR since the total amount >$50,000.
The UK/US Tax treaty is very complex and a US Tax attorney advised me that I do not need to pay US tax on the 25% partial distribution "lump sum" as this fall under Article 17, 1 (a) and/or (b) and not Article 17, 2 which covers lump sums and is subject to the Article 1 (4) under the Savings Clause.
However, my interpretation of Articles 17, 1 (a) and (b) are that I would be excluded from US tax if I were a UK resident - at least for the year 2016 when I received my payment.
My interpretation is not in agreement with advice from a US Tax attorney so I am totally confused and would appreciate any feedback on this very complex subject.
Thank you.
I just joined the Expats today and I need some help.
I am very confident that someone will know the answers to my question.
I am a 66 yrs old male and permanent resident of the US (>20 yrs)
As a British Citizen I worked in the UK for >20 yrs and claimed my UK Company pension on March, 2016 as I turned 65 yrs.
In accordance with UK pension rules I opted for the 25% tax-free "lump sum" and a reduced monthly pension payment.
I filed my 2016 on Feb, 2017 and did not include my UK pensions as I believed that they were tax free. However, I now understand that I will need to resubmit an amended US Tax return to include my UK pension plus complete a FBAR since the total amount >$50,000.
The UK/US Tax treaty is very complex and a US Tax attorney advised me that I do not need to pay US tax on the 25% partial distribution "lump sum" as this fall under Article 17, 1 (a) and/or (b) and not Article 17, 2 which covers lump sums and is subject to the Article 1 (4) under the Savings Clause.
However, my interpretation of Articles 17, 1 (a) and (b) are that I would be excluded from US tax if I were a UK resident - at least for the year 2016 when I received my payment.
My interpretation is not in agreement with advice from a US Tax attorney so I am totally confused and would appreciate any feedback on this very complex subject.
Thank you.
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