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Back in the UK - but only temporarily! Tax question

Back in the UK - but only temporarily! Tax question

Old Jun 22nd 2022, 8:42 pm
  #16  
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Default Re: Back in the UK - but only temporarily! Tax question

Thanks for the link - I'll look into it.
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Old Jun 23rd 2022, 9:42 am
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Default Re: Back in the UK - but only temporarily! Tax question

Originally Posted by ArizonaTrail View Post
Curious if either of you know about how retirement contributions are handled in this situation? I'm planning to max out my 403b (a type of 401k), my 401a and our IRA during the months I am in the UK in an effort to drive down my taxable income. My understanding is that there's a 40K pound limit on deductible pension contributions. I can't quite get there by maxing out everything in 2022, largely because I made too many contributions this year while I was still in the US. I'm currently planning to leave with my wife and kids at the end of December 2022, but could I perhaps let my family go home but I extend my stay a few days into January and max out our IRAs for 2023, which might work because of the UK's April to April tax year. Any thoughts on this strategy?
It is my understanding that you can only contribute to your retirement plans (IRA,401k - assume 403b is same) to the extent of your earned US income in that US tax year. So for 2022, if you wanted to contribute $20k you would need to have earned income of at least $20k in 2022 and the same would apply to 2023 contributions. I am afraid I have no knowledge on the UK limits.
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Old Jun 23rd 2022, 9:44 am
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Default Re: Back in the UK - but only temporarily! Tax question

Originally Posted by durham_lad View Post
If you look at form 1116 you will see that there is a box labeled “Resourced by Treaty” which treats US source income as if it were foreign because the UK/US tax treaty specifies certain types of income as the UK being the primary taxation authority, US private pensions being one such type, and US earned income being another, I believe. The UK also has first bite of the cherry with dividends from taxable accounts.

ETA
I file 2 forms 1116, one with Resourced By Treaty marked for my US pensions and a 2nd form marked as General Category for my UK private pensions, UK interest etc
Thank you
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