Discussion:UK Old Age Pension
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Discussion Forum Index --> Tax Questions --> UK Old Age Pension
PaperworkCPA (talk|edits) said: | 8 April 2008 |
| A US resident started receiving a small British Old Age pension in 2007. TAxpayer is a green card holder. The pension is already taxed in the UK and according to the taxpayer, they must have the taxes deducted in the UK. The pension is from working for a short time during WWII in a private industry job.
I think the pension is fully taxed in the US because the 1)taxpayer is a US resident, 2)the country of residency gets to tax the pension per the US/UK treaty, and 3)it is not a governmental pension. In addition, I think the taxpayer needs to get the UK to stop withholding taxes because the taxpayer should not be using form 1116 to claim the foreign tax paid. Taxpayer gets no paperwork during the year and the checks are automatically deposited into an account. Taxpayer seems to think it is like US social security. Any thoughts? | |
| 8 April 2008 | |
| I'm curious as to why you believe the TP should not be using form 1116 to claim Ftx pd. Good luck on getting the UK to stop withholding. I did some similar research for a client last month and found references to Canada and Germany pensions taxed like US S/S, but I don't remember UK being in the list. Hope that helps. | |
PaperworkCPA (talk|edits) said: | 8 April 2008 |
| On not using form 1116.
From various threads I have read here on TaxAlmanac and elsewhere, it is my understanding that if the tax is withheld then it can be refunded. If the tax can be refunded then you can not use form 1116. Of course, the taxpayer has no idea what amount was withheld but that is another problem. | |
| 8 April 2008 | |
| This is either a UK State Pension or a "private industry" (company) pension. It cannot be both!
A UK State pension never has PAYE withheld so the 1116 is not in point. If it is a private pension it will have basis under section 72 but again would only be taxable in the US under Article 18 of the US/UK treaty ... so again the 1116 is not relevant unless you have other FTC carryovers... | |
