Taxation for Retired Teachers
To my horror, HMRC have just told me I was a government employee working as a College Lecturer, and therefore my Teacher's Pension will always be taxed in the UK unless i become an American Citizen. I've been living in the USA for a year and was just expecting all my tax back.
Are there any retirees out there that have first hand experience of this? Teacher's Pensions told me they are not a government pension, so now I'm in a battle I expect to lose with the Inland Revenue. Also sucks that I have paid taxes to the IRS as well. :( |
Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10265740)
To my horror, HMRC have just told me I was a government employee working as a College Lecturer, and therefore my Teacher's Pension will always be taxed in the UK unless i become an American Citizen. I've been living in the USA for a year and was just expecting all my tax back.
Are there any retirees out there that have first hand experience of this? Teacher's Pensions told me they are not a government pension, so now I'm in a battle I expect to lose with the Inland Revenue. Also sucks that I have paid taxes to the IRS as well. :( |
Re: Taxation for Retired Teachers
Thanks Nun, the 1040x information saves some looking up.
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Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10265789)
Thanks Nun, the 1040x information saves some looking up.
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Re: Taxation for Retired Teachers
Yes, that member would definitely qualify as a government worker. However, I believe that a College of Further Education is effectively a Private College, so I'm hoping to find someone who has had this battle and won.
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Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10265990)
Yes, that member would definitely qualify as a government worker. However, I believe that a College of Further Education is effectively a Private College, so I'm hoping to find someone who has had this battle and won.
Of course your state might not have income tax making things much simpler. |
Re: Taxation for Retired Teachers
Is the pension through USS or TPS, or something else. Initial Googling tells me the following:
USS is a funded scheme (ie employees an employer fund the scheme through contributions) and is private sector TPS is not funded and is a Government backed higher education pension scheme |
Re: Taxation for Retired Teachers
Mine is TPS, but the rules state that Independent Schools and Private Colleges do not count as government employment. So, everything seems to hinge on whether my employer was a public or private College. My employer says private, and they should know, so let battle commence.
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Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10266232)
Mine is TPS, but the rules state that Independent Schools and Private Colleges do not count as government employment. So, everything seems to hinge on whether my employer was a public or private College. My employer says private, and they should know, so let battle commence.
So IMHO HMRC is correct; TSP is a public service pension plan and right now you are fully taxable on it in the UK. In any case I'm not sure it's a battle worth having unless you have a big difference between UK and US tax due. |
Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10265740)
To my horror, HMRC have just told me I was a government employee working as a College Lecturer, and therefore my Teacher's Pension will always be taxed in the UK unless i become an American Citizen. I've been living in the USA for a year and was just expecting all my tax back.
Are there any retirees out there that have first hand experience of this? Teacher's Pensions told me they are not a government pension, so now I'm in a battle I expect to lose with the Inland Revenue. Also sucks that I have paid taxes to the IRS as well. :( |
Re: Taxation for Retired Teachers
I did the sums on allowances in the USA and came to the conclusion my tax would have been around 200 dollars a month, as against 205 GBP. I don't have assets in the UK, so it was pretty straight forward. I am to be about 116 USD short per month on original plan. Still, it is what it is, can't change it now. It's the health insurance that bites so hard. Amounts to at least 25% of my taxed income.
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Re: Taxation for Retired Teachers
Originally Posted by sinbad2222
(Post 10283953)
Don't complain. I am in same situation with UK Civil Service Pension taxed in UK. You will pay a much lower total tax if you pay some tax in UK because of the large UK personal allowance. Remember you cannot be taxed twice so the IRS cannot also tax you on it.
I am better off having my UK government pension taxed in the US, even with having to pay state income tax on it. In the UK I ended up paying about 16% of my total pension in tax, after deductions in the US last year I paid 14%. |
Re: Taxation for Retired Teachers
So did you take US Citizenship?
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Re: Taxation for Retired Teachers
Originally Posted by whitebear
(Post 10284066)
So did you take US Citizenship?
I decided however it worked out in future years, the difference in tax between one country and the other, probably wasn't going to be a huge amount. In 2010, 2011 I paid less tax in the US, than I would have paid in the UK. Paying tax in the UK, while living in the US, and not planning to return to the UK, didn't make sense. Why pay tax in a country where you are not going to get any benefit from it. I had to pay tax, so preferred to pay tax where I lived. |
Re: Taxation for Retired Teachers
Originally Posted by sinbad2222
(Post 10283953)
Don't complain. I am in same situation with UK Civil Service Pension taxed in UK. You will pay a much lower total tax if you pay some tax in UK because of the large UK personal allowance. Remember you cannot be taxed twice so the IRS cannot also tax you on it. The same applies for income from a let UK property - HMRC will insist on taxing that. I believe that if you become a US citizen then your UK pension will be paid free of tax and you will have to pay US tax at US rates on the pension. A very good reason never to become a US citizen as well as a possible distaste for swearing allegiance to a foreign country.
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