My wife immigrated in March 2024. She is an LPR. She worked as a teacher in the UK and retired at the end of 2023. Her only income during 2024 was her teacher's pension (it's a defined benefit scheme). She applied for NT status, going through the IRS and then HMRC process in mid 2024 but has still not heard anything from HMRC (they said mid-April 2025). Thus, she paid UK taxes on her pension during 2024. She lives in Virginia.

I did a rough calculation and I think she's paid more in UK taxes than her federal and Virginia state tax liabilities combined. So my questions are:

1. Is she dual status for 2024?
2. Will she ger exemption from Virginia state taxes based on her UK taxes paid?
3. Should she attempt to file before April 15 (and then refile after HMRC sorts out her status and repays tax paid) or file for an exemption and wait for HMRC to repay her later in the year?

One more bizarre issue she faces relates to the utter stupidity of Teachers Pensions. She was paid the standard lump sum 25% in January 2024 (before she immigrated) on retirement but then completely out of the blue (without explanation or warning) Teachers Pensions re-assessed her pension and paid her an additional lump sum in January 2025. How does she deal with that? Is it now taxable by the IRS even though she expressly asked Teachers Pensions not to make any lump sum payments after she had immigrated?

Just a note for anyone who is in Teachers Pension and hasn't yet taken your benefits, they are in utter turmoil. They are years behind dealing with cock-ups and queries so you might want to start talking to them ASAP before you retire.

I think we need a good tax lawyer/adviser/CPA. Anyone got a good recommendation?.

1. Yes if she only became an LPR in 2024, and files an individual return.
2. Can’t talk to Virginia state taxes specifically, but usually state taxes are based upon the income reported on your federal return. At federal level she will pay taxes on whatever income she received since she became an LPR, including anything received from the UK but less any UK taxes withheld. Any UK income received prior to that does not need to be reported. You will pay taxes on all of the reported income. No tax credit is due because of HMRC taxes paid. They should be claimed back from the UK, and is usually refunded as part of the NT process. It would be terrifically unusual for a state to deviate from that process.
3. Since the refund will now be in tax year 2025 (or later) and because she will still be liable to pay all 2024 taxes due on April 15, and will only incur interest by delaying it will be best to go ahead and file. When HMRC refund any tax paid, that needs to be declared as income in the tax year received, but remember you did not pay 2024 taxes on that withheld/refunded amount because it was not income in the 2024 tax year.

Unfortunately, all worldwide received since she became an LPR is taxable in the tax year received, regardless of circumstances or any tax free amounts within the UK . Therefore any additional lump sum paid is fully taxable in the US.

Just confirming I understand: She should:

1. file promptly;
2. report pension income minus UK tax paid for 2024;
3. pay federal and state taxes as appropriate;
4. receive the UK refund;
5. file for 2025 as normal but include UK tax refunds for 2024 as income.

Yes.

How does one report:

1. UK social security payments
2. a final salary pension
3. interest on foreign bank accounts

on the US tax return?

By UK Social Security, I assume you mean the UK state pension, in which case put it on Line 8 of Form 1040 (Other Income). The same for a UK final salary pension. Interest on foreign bank accounts goes on the 1040 line 2b, same as interest on a US account.

The UK State pension and pension distributions from a UK final salary pension are always reported at Lines 5a and 5b on page 1 of Form 1040. If required to file, also reported on an 8938. UK bank interest is reported on Schedule B.

UK pensions are reported on a general limitation Form 1116. UK bank interest is reported on a passive Form 1116.

Update. HMRC have told us Teachers Pensions is a government pension and falls under Article 19 of the tax treaty. Article 19 appears to say a government pension is taxable in the state that pays the pension and not the state of residence (if they differ). Does anyone have any experience of how to deal with this? The other question is, does that mean any UK government lump sum is not taxable in the US because of the different status of the pension?

If the pension is considered to be a UK government pension received for services to a government entity then it would normally be taxed by the UK only, and that would include the lump sum payment. I think the Teachers Pension scheme qualifies as such. However, I think there is an exception to that if she resides in the US and becomes a US citizen in which case I believe that the pension then becomes taxable in the US. If planning to become a USC and remains a US resident she might want to double check that and if confirmed consider the tax consequences. Because of the UK tax free allowance she will likely pay minimal UK tax on the pension, but if subject to US taxation that would rise considerably.

You have to report the government pension on the US tax return regardless of who taxes it. If only taxed by the UK then you should enter on Line 5 and either create a substitute 1099R to identify the amount that is taxable and the amount that is tax free; or as others have done report the income on Line 5, but also report an identical negative amount as other income. Either way, the end result is to make it tax free in the US. Creating a substitute 1099R is fairly easy online and a tax ID of 99-1234567 works.

There are others in this forum who are in receipt of U.K. government pensions and they will be able to provide more information.