Where Taxpayers and Advisers Meet

US tax on UK pensions etc

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Postby Hotspur6355 » Sat Feb 25, 2006 12:50 pm

I would appreciate help with the following. I came to the US several yrs ago from the UK and I am now a naturalized US citizen. My mother, a UK citizen who is in her 90's and a widow has now come here to live as a resident alien in the US. Her UK state pension and her company widows pension are both paid into her US bank account in $US. She has some investment income in the US from a money market account. Tax is deducted at source in the UK from her UK pensions to the extent that they might exceed her UK personal allowance. Should her US form 1040 tax return include these UK pension amounts as foreign income or are they excluded by a US-UK tax treaty? If these amounts are taxable in the US how do we proceed?

tax me less!
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Postby tax me less! » Sat Feb 25, 2006 12:56 pm

1. Now that she is resident in the US her company pension is taxable where she resides. It is treaty exempt from UK tax, so she should claim a refund from the UK, and report it in the US only.

2. Her UK state pension is also treaty taxable only in the US, but unlike US social security it is all taxable.
Don't forget to see if she needs to file a form TDF90-22.1.

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Postby Hotspur6355 » Mon Feb 27, 2006 9:42 am

Thanks you very much for the useful and speedy response

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Postby dkbriery » Fri Feb 15, 2008 11:06 am

I have a client that is in very nearly the same situation. However, the state pension that she receives (they call it social security or DFID pension)is considered not taxable in England. They say it has a code of NT but they cannot tell her why it is not taxable.

Since it would not be taxable if she were in England, is it taxable in the United States?

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