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Pension payments

Pension payments

Old Feb 6th 2018, 11:48 pm
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Question Pension payments

We are going to do our taxes this week my husband receives a pension from Oxford University it is paid into our UK Barclays Account and is taxed by HMRC, will we need to tell the person preparing our taxes about the payments. We are GC holders not citizens.
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Old Feb 7th 2018, 12:22 am
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Default Re: Pension payments

Hopefully someone with experience will be along to comment, but I believe you should change your pension to be paid without any tax withholding in the uk.

There isn't any difference between permanent residents and us citizens with regards to tax.
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Old Feb 7th 2018, 12:52 am
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Default Re: Pension payments

Tom is right, your husband's pension should he paid gross in the UK and taxed in the US.

He will probably need to complete a UK tax return to get the tax he has paid refunded.
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Old Feb 7th 2018, 2:03 am
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Default Re: Pension payments

And the specific answer to the OPs question is yes, the US tax preparer will need to know if any pension was paid in 2017. At this point, you'll probably have to claim a foreign tax credit for the tax paid to the UK, which may or may not be as much as the tax paid there.

Last edited by Giantaxe; Feb 7th 2018 at 2:10 am. Reason: No state income tax in Texas!
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Old Feb 7th 2018, 2:16 am
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Default Re: Pension payments

Originally Posted by Giantaxe View Post
And the specific answer to the OPs question is yes, the US tax preparer will need to know if any pension was paid in 2017. At this point, you'll probably have to claim a foreign tax credit for the tax paid to the UK, which may or may not be as much as the tax paid there.
So to get a tax credit for tax paid into the U.K. I guess we will need a P60?
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Old Feb 7th 2018, 6:07 am
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Default Re: Pension payments

Originally Posted by sarasota chic View Post
So to get a tax credit for tax paid into the U.K. I guess we will need a P60?
You'll need anything official showing what tax was paid in the UK, and the pension received. That is needed in case the IRS decides to audit you.

For the purposes of your tax return you just need to be able to tell the person doing it what the total UK income was and how much UK tax was paid. There is no need to include UK paperwork with your US tax return just keep it for your records.
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Old Feb 7th 2018, 7:52 am
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Default Re: Pension payments

The pension income is solely US taxable under Article 17 of the treaty. You'd reclaim the tax withheld in the UK; and have no foreign tax credit to claim in the US.
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Old Feb 7th 2018, 11:35 am
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Default Re: Pension payments

Originally Posted by sarasota chic View Post
So to get a tax credit for tax paid into the U.K. I guess we will need a P60?
For the US you will need payslips. You will not need to submit these but you should keep them as a record of the gross pay received. The P60 is of no use for the US because of the different tax years. You should convert the gross payments to USD on the date they were received using any published exchange rate (I use xe.com). You should also take the total GBP paid for the year and use the IRS Yearly Average Currency Exchange Rate here: https://www.irs.gov/individuals/inte...exchange-rates and see what that gives you in USD. The latter is normally the most favorable.

For the UK you will need the P60 to claim the tax refund. As others have said, the pension should be paid gross in the UK.
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Old Feb 7th 2018, 12:18 pm
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Default Re: Pension payments

Originally Posted by Giantaxe View Post
And the specific answer to the OPs question is yes, the US tax preparer will need to know if any pension was paid in 2017. At this point, you'll probably have to claim a foreign tax credit for the tax paid to the UK, which may or may not be as much as the tax paid there.
Exactly what we do with husband's Canadian pension. Tax paid in Canada. Foreign Tax Credit in the US.
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Old Feb 7th 2018, 2:30 pm
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Default Re: Pension payments

Good info here already.

I will just add that when I started receiving a UK pension while living in the USA I was able to file the paperwork to stop HMRC taking out tax and as I'd only paid 3 or 4 months of taxes by the time the paperwork went through they refunded the tax into my next pension payment. (OP does not say how long HMRC have been taking the payments, but probably too late now to get it refunded without filing a UK tax return)

I keep all my monthly pension advice statements in case I am audited by the IRS.
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Old Feb 11th 2018, 2:22 pm
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Default Re: Pension payments

I claimed an old pension from the UK a few years ago and filed a 'double taxation' form, the UK tax was then refunded to me.
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