trottytrue

Does anyone know if I have to declare my UK pension to the US and do they tax me on it. Its not a works pension just the old age pension.....

Bob

I don't know about the tax but you do have to declare the income I think, either way I'm pretty sure this has been answered in a few of the other older pension threads which you might find if you searched them out

lansbury

Yes you do have to declare it, but you should not have to pay tax on it twice.

I believe it is shown in box 16a on the 1040 but then you would have to read the instructions for box 16b to see if it is classed as a taxable amount in the US or not.

We haven't quite reached claiming that pension in the UK yet so haven't looked into how it is shown on the return.

This is the relevant part of the UK/US Tax Treay

ARTICLE 17
Pensions, Social Security, Annuities, Alimony, and Child Support

1. a) Pensions and other similar remuneration beneficially owned by a resident of a
Contracting State shall be taxable only in that State.

b) Notwithstanding sub-paragraph a) of this paragraph, the amount of any such
pension or remuneration paid from a pension scheme established in the other Contracting State
that would be exempt from taxation in that other State if the beneficial owner were a resident
thereof shall be exempt from taxation in the first-mentioned State.

2. Notwithstanding the provisions of paragraph 1 of this Article, a lump-sum payment
derived from a pension scheme established in a Contracting State and beneficially owned by a
resident of the other Contracting State shall be taxable only in the first-mentioned State.

3. Notwithstanding the provisions of paragraph 1 of this Article, payments made by a
Contracting State under the provisions of the social security or similar legislation of that State
to a resident of the other Contracting State shall be taxable only in that other State.

4. Any annuity derived and beneficially owned by an individual (“the annuitant”) who
is a resident of a Contracting State shall be taxable only in that State. The term “annuity” as
used in this paragraph means a stated sum paid periodically at stated times during the life of the
annuitant, or during a specified or ascertainable period of time, under an obligation to make the
payments in return for adequate and full consideration (other than in return for services
rendered).

5. Periodic payments, made pursuant to a written separation agreement or a decree of
divorce, separate maintenance, or compulsory support, including payments for the support of a
child, paid by a resident of a Contracting State to a resident of the other Contracting State, shall
be exempt from tax in both Contracting States, except that, if the payer is entitled to relief from
tax for such payments in the first-mentioned State, such payments shall be taxable only in the
other State.

The way I read point 3 your UK state pension can only be taxed in the US if you are resident here and the UK should not be withholding tax on it, but I wouldn't like to bet that is right. They manage to word these things in a confusing way.

tony126

I pay my taxes to the IRS on my UK pension. If you choose to do this you need to get an exemption from the UK Pensions so you will not be taxed twice as has been stated. At the end of the day the it is down to you but they must be declared one way or the other.

trottytrue

Thankyou all for your replies. We decided that we would declare it and then decide what to do next year. We did hope that we could keep the money in the Uk as we are moving back when we sell up but you have to live in the UK to set up a bank account and have a home address it would have made things so much easier just to leave it in the UK

lansbury

How do you go about getting the exemption. My wife (USC) can claim her UK State pension next year so knowing in advance what needs to be done would be appreciated.

Taffyles

If you're a PR or USC yes the UK State Pension has to be reported here and is fully taxable, as it isn't taxed in UK. Lines 16a and 16b on the tax form.

Work pensions are more complicated- depends if they are taxed in UK or not.

trottytrue

Thankyou very much