UK pension questions from a Green Card holder
Sep 11th 2013, 4:25 am
#16
Heading for Poppyland
Joined: Jul 2007
Location: North Norfolk and northern New York State
Posts: 14,727
Re: UK pension questions from a Green Card holder
Not exactly.
As the UK state pension is taxed like a non-qualified annuity you can use the General Rule to calculate the taxable portion of the annuity. Basically any after tax amounts you contributed to the principal would not get taxed again, so you have to work out your Cost in the annuity. If you paid Class 3 NICs your cost would be greater than if you paid Class 2 NICs while in the US. Because the value of the UK state pension is so much more than a full record of Class 2 NICs most of it will be US taxable. I have 30 years of Class 2 contributions and my Cost is still a fraction of the value of the pension. I did a rough calculation and I think around 95% of it is taxable in my case.
http://www.irs.gov/pub/irs-pdf/p575.pdf
As the UK state pension is taxed like a non-qualified annuity you can use the General Rule to calculate the taxable portion of the annuity. Basically any after tax amounts you contributed to the principal would not get taxed again, so you have to work out your Cost in the annuity. If you paid Class 3 NICs your cost would be greater than if you paid Class 2 NICs while in the US. Because the value of the UK state pension is so much more than a full record of Class 2 NICs most of it will be US taxable. I have 30 years of Class 2 contributions and my Cost is still a fraction of the value of the pension. I did a rough calculation and I think around 95% of it is taxable in my case.
http://www.irs.gov/pub/irs-pdf/p575.pdf
Sep 11th 2013, 4:33 am
#17
Lost in BE Cyberspace
Joined: Jun 2008
Location: San Francisco Bay Area
Posts: 10,678
Re: UK pension questions from a Green Card holder
Not exactly.
As the UK state pension is taxed like a non-qualified annuity you can use the General Rule to calculate the taxable portion of the annuity. Basically any after tax amounts you contributed to the principal would not get taxed again, so you have to work out your Cost in the annuity. If you paid Class 3 NICs your cost would be greater than if you paid Class 2 NICs while in the US. Because the value of the UK state pension is so much more than a full record of Class 2 NICs most of it will be US taxable. I have 30 years of Class 2 contributions and my Cost is still a fraction of the value of the pension. I did a rough calculation and I think around 95% of it is taxable in my case.
http://www.irs.gov/pub/irs-pdf/p575.pdf
As the UK state pension is taxed like a non-qualified annuity you can use the General Rule to calculate the taxable portion of the annuity. Basically any after tax amounts you contributed to the principal would not get taxed again, so you have to work out your Cost in the annuity. If you paid Class 3 NICs your cost would be greater than if you paid Class 2 NICs while in the US. Because the value of the UK state pension is so much more than a full record of Class 2 NICs most of it will be US taxable. I have 30 years of Class 2 contributions and my Cost is still a fraction of the value of the pension. I did a rough calculation and I think around 95% of it is taxable in my case.
http://www.irs.gov/pub/irs-pdf/p575.pdf
Last edited by Michael; Sep 11th 2013 at 4:38 am.
Sep 11th 2013, 5:04 am
#18
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: UK pension questions from a Green Card holder
and in many cases it doesn't make any difference anyway.
Last edited by nun; Sep 11th 2013 at 5:30 am.
