UK Pensions related to UK/US Tax Treaty
#46
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Joined: Dec 2017
Posts: 2
Re: UK Pensions related to UK/US Tax Treaty
I am in process of transferring out my UK pension scheme with the option of a 25% tax free lump sum, my advisor tell me because the lump sum is only a partial payment it will be tax free in the US as per the treaty article 17 1 (b)
#47
Re: UK Pensions related to UK/US Tax Treaty
The last paragraph (Lump Sums) of this HMRC document is what suggests the above. https://www.gov.uk/hmrc-internal-man...elief/dt19876a
Last edited by lansbury; Jan 2nd 2018 at 10:06 pm. Reason: missing letter
#48
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Re: UK Pensions related to UK/US Tax Treaty
I am a permanent resident, still a British citizen, i believe that is the document he is referring to.
#49
Re: UK Pensions related to UK/US Tax Treaty
For what the opinion of anybody on the Internet is worth, I think your advisor is correct. The only caveat being a document published by HMRC is not binding on the IRS.
#50
Re: UK Pensions related to UK/US Tax Treaty
This is about the only document from the IRS I can find that helps.
https://www.irs.gov/businesses/the-t...-distributions
General Rule:Treaties confirms that the Tax Treaty is the defining document so giving support to the HMRC document stating what the treaty agrees.
https://www.irs.gov/businesses/the-t...-distributions
General Rule:Treaties confirms that the Tax Treaty is the defining document so giving support to the HMRC document stating what the treaty agrees.
#51
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Re: UK Pensions related to UK/US Tax Treaty
I cannot figure out why there is no clear statement on the question of how to fill out the IRS form(s) under the following simple circumstances, which probably relate to many UK ex-pats in the USA:
1. I am a "US Person" under common parlance.
2. I am not a US citizen.
3. I am a UK citizen by birth and heritage.
4. I am a Long Term Resident of the USA (>30 years)
5. I just turned 70.
6. I am taking US Social Security payments monthly.
7. I am taking UK State Pension payments quarterly to my UK £ account
8. I am taking payments from a USA company pension.
9. I have no other foreign pensions.
10. Because I delayed taking my UK State Pension I received a one-time catch-up payment representing the payments I had deferred.
A Is the USA/UK Tax Treaty of any benefit to me in terms of reducing taxes (I have no requirement to pay UK taxes)?
B How/where do I report the one-time income from my UK State Pension?
C How/where do I report the recurring quarterly income from my UK State Pension?
1. I am a "US Person" under common parlance.
2. I am not a US citizen.
3. I am a UK citizen by birth and heritage.
4. I am a Long Term Resident of the USA (>30 years)
5. I just turned 70.
6. I am taking US Social Security payments monthly.
7. I am taking UK State Pension payments quarterly to my UK £ account
8. I am taking payments from a USA company pension.
9. I have no other foreign pensions.
10. Because I delayed taking my UK State Pension I received a one-time catch-up payment representing the payments I had deferred.
A Is the USA/UK Tax Treaty of any benefit to me in terms of reducing taxes (I have no requirement to pay UK taxes)?
B How/where do I report the one-time income from my UK State Pension?
C How/where do I report the recurring quarterly income from my UK State Pension?
#53
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,131
Re: UK Pensions related to UK/US Tax Treaty
I cannot figure out why there is no clear statement on the question of how to fill out the IRS form(s) under the following simple circumstances, which probably relate to many UK ex-pats in the USA:
1. I am a "US Person" under common parlance.
2. I am not a US citizen.
3. I am a UK citizen by birth and heritage.
4. I am a Long Term Resident of the USA (>30 years)
5. I just turned 70.
6. I am taking US Social Security payments monthly.
7. I am taking UK State Pension payments quarterly to my UK £ account
8. I am taking payments from a USA company pension.
9. I have no other foreign pensions.
10. Because I delayed taking my UK State Pension I received a one-time catch-up payment representing the payments I had deferred.
A Is the USA/UK Tax Treaty of any benefit to me in terms of reducing taxes (I have no requirement to pay UK taxes)?
B How/where do I report the one-time income from my UK State Pension?
C How/where do I report the recurring quarterly income from my UK State Pension?
1. I am a "US Person" under common parlance.
2. I am not a US citizen.
3. I am a UK citizen by birth and heritage.
4. I am a Long Term Resident of the USA (>30 years)
5. I just turned 70.
6. I am taking US Social Security payments monthly.
7. I am taking UK State Pension payments quarterly to my UK £ account
8. I am taking payments from a USA company pension.
9. I have no other foreign pensions.
10. Because I delayed taking my UK State Pension I received a one-time catch-up payment representing the payments I had deferred.
A Is the USA/UK Tax Treaty of any benefit to me in terms of reducing taxes (I have no requirement to pay UK taxes)?
B How/where do I report the one-time income from my UK State Pension?
C How/where do I report the recurring quarterly income from my UK State Pension?
B&C - you total up all payments for your UK pensions for the calendar year and report that total on line 16a. You can use the IRS average exchange rate to convert to $’s. I create a substitute 1099-R each year to report my UK pensions. (TurboTax and the like will walk you through this)
#54
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Joined: Mar 2018
Posts: 3
Re: UK Pensions related to UK/US Tax Treaty
I retired in the UK (where I have been resident most of my life) at the end of July 2017 and I receive the UK State Pension, a State Pension from Luxembourg, and two occupational pensions from the U.K. I also had a one-off tax free lump sum payment from one of the U.K. occupational pensions. How do I report this on the US tax form? How can I allow for tax treaties and avoid any double taxation? I find this area very confusing. I am a dual US/UK citizen.
Last edited by 1penelope1; Mar 5th 2018 at 4:19 pm. Reason: Added information
#55
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Joined: Nov 2012
Posts: 902
Re: UK Pensions related to UK/US Tax Treaty
I retired in the UK (where I have been resident most of my life) at the end of July 2017 and I receive the UK State Pension, a State Pension from Luxembourg, and two occupational pensions from the U.K. I also had a one-off tax free lump sum payment from one of the U.K. occupational pensions. How do I report this on the US tax form? How can I allow for tax treaties and avoid any double taxation? I find this area very confusing. I am a dual US/UK citizen.
#56
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Thread Starter
Joined: Mar 2017
Posts: 11
Re: UK Pensions related to UK/US Tax Treaty
I also have a few questions for the Expat group based on the following:
1) My 2016 US taxes included 2 UK company pension lump sums (25% each) and I considered not submitting based on the US/UK Tax treaties as it was very confusing.
2) I would now like to appeal to the IRS to reconsider my 2016 taxes based on the treaties as I have everything to gain and nothing to lose.
3) How do I go about this process without involving a lawyer?
1) My 2016 US taxes included 2 UK company pension lump sums (25% each) and I considered not submitting based on the US/UK Tax treaties as it was very confusing.
2) I would now like to appeal to the IRS to reconsider my 2016 taxes based on the treaties as I have everything to gain and nothing to lose.
3) How do I go about this process without involving a lawyer?
#57
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,131
Re: UK Pensions related to UK/US Tax Treaty
I also have a few questions for the Expat group based on the following:
1) My 2016 US taxes included 2 UK company pension lump sums (25% each) and I considered not submitting based on the US/UK Tax treaties as it was very confusing.
2) I would now like to appeal to the IRS to reconsider my 2016 taxes based on the treaties as I have everything to gain and nothing to lose.
3) How do I go about this process without involving a lawyer?
1) My 2016 US taxes included 2 UK company pension lump sums (25% each) and I considered not submitting based on the US/UK Tax treaties as it was very confusing.
2) I would now like to appeal to the IRS to reconsider my 2016 taxes based on the treaties as I have everything to gain and nothing to lose.
3) How do I go about this process without involving a lawyer?
https://www.irs.gov/pub/irs-pdf/i1040x.pdf
(Page 2, “When to File”)
#59
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,131
Re: UK Pensions related to UK/US Tax Treaty
a substitute 1099-R (4852) to support each foreign pension entry on line 16
Schedule B to report bank interest from my UK savings accounts and part III of
this form is where one records if they have or do not have any foreign bank accounts
Form 6251 to show the calculation that I did not come under the AMT even though I did not itemize deductions.
#60
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Joined: Mar 2018
Posts: 12
Re: UK Pensions related to UK/US Tax Treaty
Hi. I also would like to know the answer to the 25% tax free question. I just started taking amounts from Pension lump sum commencement not taxed in U.K. I have been told these amounts are NOT taxable in US. The lump sum meaning in US is NOT the same as UK lump sum. The relevant tax treaty para is 17, 1 b NOT 17, 2. Why is this section in the U.K. US tax treaty? The 25% tax free amount was always there so does the treaty not exist to add protection? I found a US tax lawyer online who has published opinion it is NOT taxable, see tax-charts.com at the bottom of his form. I have tried to contact him but so far been unsuccessful...