paulward50

I am getting so many conflicting stories, there must be someone out there who has been through this!!

This is my first year here in the US and my first year filing taxes. I was in the British Army for 22 years and therefore receive a UK Armed Forces monthly pension which is taxed and then paid into my UK bank account. I have been told that because of the UK/US tax treaty, I cannot be taxed twice on my pension. Is this true? Also do I have to mention it when filing?

If anybody can help I would be soooo grateful. As always, thank you all for your time.

Bob

Plenty of threads on pensions and tax filing.

You do need to declare the income, but unless it's massive, you most likely do not have any US taxes owed on it.

paulward50

Thank you Bob.

nun

I believe you need to look at Article 19(2) of the US/UK tax treaty which deals with Government pensions.

You won't be taxed twice, but exactly how you are taxed depends on your citizenship and residency. So what is your citizenship and residency status?

lansbury

Not completely correct. My CPA never declared my government service pension until I become a US citizen.

nun

A UK Government pension is only taxable in the UK unless the recipient is a US citizen resident in the US when it's only taxable in the US

theOAP

Here's the legalise:

http://www.irs.gov/pub/irs-pdf/p901.pdf

Look on page 33 where it discusses tax on wages and pensions when paid by the UK Govt.

lansbury

yes I know, I've had one for over 5 years, hence the reason in some circumstances it doesn't go on the US tax return.

nun

Yep that's pretty clear, probably best to file 8833 as well as insurance.

If you are a US citizen and US resident you should file for relief from UK tax at source using US-Individual-2002.
Look at the notes under

C.2: UK pensions and purchased annuities

towards the end of the form

paulward50

I am still a UK resident here as a Perm Res. Some great advice, thank you all.

nun

This is confusing me now. What visa are you on? How long have you been out of the UK, where do you live permanently?

paulward50

I arrived in the US with a IR visain Dec 2010. My wife is a US citizen and I am a UK citizen. I have a Permanent Resident card.

nun

OK so you are a US permanent resident with a "Green card". I assume you have a home in the US and live there with your wife. That means that you are not resident in the UK. You may still be domiciled in the UK, but for tax purposes you are a UK non-resident. Here are some criteria for becoming UK non-resident

You will become not resident and not ordinarily resident in the UK if:

* your absence and employment from the UK covers a complete tax year (that is 6 April to 5 April)
* you spend less than 183 days in the UK during the tax year
* your visits to the UK do not average 91 days or more a tax year over a maximum of four years

So as a UK citizen resident in the US the UK will tax your military pension and it is exempt from US tax under Article 19(2) of the tax treaty. There is wording on the IRS website that you don't need to file a treaty claim form 8833 for foreign pensions and you could just write on line 21 something like "UK military pension, US/UK tax treaty Article 19(2) exempt" and enter 0. I'd probably file 8833 as well just in case they want more information.

paulward50

Thank you so much Nun.

TerryVA

I have a question about timing.

Next year I'll be eligible for my AFPS75 pension, and wonder if I should wait until I get the first payment before sending in the US-Individual-2002 & IRS Form 8802, or should I go ahead and send it in beforehand?

Then, when it's time to get the "civilian" UK pension, do I need to send in another form, or do they remember my NI number from the first form?

(I'm a dual citizen, US resident.)