A receive pension from UK after taxes. Should I declare this as income in USA and pay tax?

Question

I worked at an auto company in UK during 1970s and now live in USA. Upon reaching 65 years, I started receiving a small pension after UK taxes. Should I report the net amount of pension from UK as income in USA tax return? please advice.

Answer 1

You need to read the US/UK tax treaty.  It's at irs.gov.  Read articles 17 and 18.

Basic rule--it's taxable based on where you live at the time you get the money.  You live in the US so it's taxable in the US and not the UK.  If the money includes a return of capital, then that portion isn't taxable.

What in the world do you mean by net amount???  What are the deductions?  You are probably taxed on the gross amount.

And don't assume the IRS will never find out.  The UK speaks English.  The UK is computerized.  It's not rocket science for the two countries to share data.

Answer 2

I believe we have a double-taxation relief agreement with the US. Therefore if you are receiving the income net of UK tax you can't be taxed again. If the tax rate in the State where you reside is more than the UK tax paid then you will have to pay the difference. Just check with the IRS. If you are non-domiciled for UK tax then presumably you could get the pension paid gross.I am sure you won't be liable for two lots of taxes.

Answer 3

Hi

Sorry I can't help but I think you would get a more answers if you ask your question in the USA tax section because there will be more people there who know about the USA tax return.

Hope you get your answer. x