Funding UK retirement form US based accounts
Mar 2nd 2011, 1:41 am
#16
In the pink
Joined: Oct 2006
Location: USA
Posts: 3,324
Re: Funding UK retirement form US based accounts
Could someone clarify - is the "30% withholding" some sort of automatic 30% income tax at source (e.g., by the pension fund company) on pension disbursement (including monthly payments)? If so, would the US/UK tax treaty allow you to reclaim that if it is greater than your tax liability in the UK?
I'm getting a bit worried. I assumed if I retired in the UK, that any income from US retirement holdings would be paid gross, and I'd declare it on my US tax return at which point I'd be taxed appropriately. I don't like the idea of being automatically taxed 30% on all income from my US retirement fund ... does this also apply to US Social Security (if it even exists by then, of course)?
I'm getting a bit worried. I assumed if I retired in the UK, that any income from US retirement holdings would be paid gross, and I'd declare it on my US tax return at which point I'd be taxed appropriately. I don't like the idea of being automatically taxed 30% on all income from my US retirement fund ... does this also apply to US Social Security (if it even exists by then, of course)?
Go the section where it discusses taxes, near the end of the report. It will tell you that non USA citizens will have 30% tax taken out of SS.
Mar 2nd 2011, 2:11 am
#17
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Mar 2nd 2011, 2:16 am
#18
Heading for Poppyland
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,719
Re: Funding UK retirement form US based accounts
I guess there are answers but not all from one source, and they are very complex, and each individual will need to retain a potentially expensive professional adviser. I don't mind paying for an adviser (to plan out changes I may need to make in my portfolio,) and then I don't mind paying for a preparer to do taxes each year. But I would like to be able to educate myself first, so I have a broad idea of the issues and intelligent questions I could ask the professionals!
Mar 2nd 2011, 11:14 am
#19
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Joined: Jun 2005
Posts: 451
Re: Funding UK retirement form US based accounts
http://www.ssa.gov/pubs/10137.html#taxes
Go the section where it discusses taxes, near the end of the report. It will tell you that non USA citizens will have 30% tax taken out of SS.
Go the section where it discusses taxes, near the end of the report. It will tell you that non USA citizens will have 30% tax taken out of SS.
Mar 8th 2011, 6:54 am
#20
Just Joined
Joined: Mar 2011
Posts: 5
Re: Funding UK retirement form US based accounts
I moved back to the UK in September after living in the US for 10 years. I became a US Citizen while I was there. Since returning, I withdrew my retirement fund and got charged the 30% fee. I filed my taxes and got it returned to me this week but owe $2800!! Can anyone recommend anyone in the UK who can help me with sorting all this out? I am so confused about who I need to pay money to etc and want to make sure I am doing this correctly. Any advice would be really appreciated.
Mar 8th 2011, 9:32 am
#21
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Joined: Aug 2004
Posts: 4,754
Re: Funding UK retirement form US based accounts
I moved back to the UK in September after living in the US for 10 years. I became a US Citizen while I was there. Since returning, I withdrew my retirement fund and got charged the 30% fee. I filed my taxes and got it returned to me this week but owe $2800!! Can anyone recommend anyone in the UK who can help me with sorting all this out? I am so confused about who I need to pay money to etc and want to make sure I am doing this correctly. Any advice would be really appreciated.
Just as an aside to all this, if you are a US citizen you should NOT be having the 30% flat tax withheld from any payments made to you in the UK...
Originally Posted by IRS Website
30% Flat Rate Withholding
Generally, U.S. payers of income other than wages, such as dividends and royalties, are required to withhold tax at a flat 30% (or lower treaty) rate on nonwage income paid to nonresident aliens. If you are a U.S. citizen or resident alien and this tax is withheld in error from payments to you because you have a foreign address, you should notify the payer of the income to stop the withholding. Use Form W-9 to notify the payer.
You can claim the tax withheld in error as a withholding credit on your tax return if the amount is not adjusted by the payer.
Generally, U.S. payers of income other than wages, such as dividends and royalties, are required to withhold tax at a flat 30% (or lower treaty) rate on nonwage income paid to nonresident aliens. If you are a U.S. citizen or resident alien and this tax is withheld in error from payments to you because you have a foreign address, you should notify the payer of the income to stop the withholding. Use Form W-9 to notify the payer.
You can claim the tax withheld in error as a withholding credit on your tax return if the amount is not adjusted by the payer.
Ignoring FATCA for the moment, after reading the IRS website it seems that as a US citizen with no US address and getting payments abroad there's no excess tax withheld by the IRS. All you do is ask your payer to withhold the appropriate tax at source and then use the 1099-R to fill that info in on your tax return.
Mar 8th 2011, 5:30 pm
#22
Just Joined
Joined: Mar 2011
Posts: 5
Re: Funding UK retirement form US based accounts
Thank you so much for the info. I will definitely look into it further. It is very confusing, I don't mind paying as long as I know I am doing it right! Thanks again.
