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USA tax on savings

USA tax on savings

Old Feb 24th 2012, 9:42 am
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Default USA tax on savings

Hi,
When my wife and I retire to the USA I will be in receipt of a works pension from the UK. I understand that that I will be taxed on my pension in the UK but NOT taxed on the same pension again when it arrives in the USA due to an agreement between the both countries..... Could anyone who has experience of this please confirm that this is true.
Also I will be investing a lump sum in the USA in the hope of it producing a further monthly amount to boost my income. I know that I will have to pay USA tax on any interest that I earn from the lump sum but could anyone give me a rough idea of what percentage you are taxed at. I'm not talking about a huge amount, probably earning interest in the region of about another $ 600 to $800 per month.
Many thanks.
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Old Feb 24th 2012, 11:28 am
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Default Re: USA tax on savings

Originally Posted by columbo
Hi,
When my wife and I retire to the USA I will be in receipt of a works pension from the UK. I understand that that I will be taxed on my pension in the UK but NOT taxed on the same pension again when it arrives in the USA due to an agreement between the both countries..... Could anyone who has experience of this please confirm that this is true.
If you are resident in the US for tax purposes, the US will tax the pension. If so, double taxation (if it were to occur) may be avoided.
EDIT: If you are a US Person, you should be declaring the works pension to the US regardless of residence.

Originally Posted by columbo
Also I will be investing a lump sum in the USA in the hope of it producing a further monthly amount to boost my income. I know that I will have to pay USA tax on any interest that I earn from the lump sum but could anyone give me a rough idea of what percentage you are taxed at. I'm not talking about a huge amount, probably earning interest in the region of about another $ 600 to $800 per month.
Many thanks.
It's impossible to say without completing a tax return at the time. It will all depend on the amount of additional income you must declare to the IRS. It could be between 0% and 35% (at present).

Sorry to be so vague, but computation of income tax in the US bears no resemblance to how it's calculated in the UK. The US returns are heavily based on deductions, exclusions, exemptions, and credits. Aside from your visa type, information needed to respond is not the kind of information you would want to put on a public forum.

Last edited by theOAP; Feb 24th 2012 at 11:35 am.
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Old Feb 24th 2012, 1:55 pm
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Default Re: USA tax on savings

You can give this calculator a try, but unfortunately, much of the language used may be difficult for someone unfamiliar with the system. It's a good example of the variances of the US system.

http://www.dinkytown.net/java/Tax1040.html
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