# US Federal Taxation and State Taxation of Pension from former UK employer



## saturn5man (Feb 6, 2010)

Hi folks, I'm a Newbie to this forum and wonder if there's someone here with personal experience of this:

I have Permanent Residence in the US (Though still a UK Citizen) and for several years now I have been in receipt of a Retirement Pension from my former UK employer.

This pension is taxed in the UK each month and I receive the residue into my UK bank account, from which I have money transferred to the US each month. 

My wife (full US Citizen) and I use a Tax Professional to complete our annual US Returns (Federal and State) and since I began receiving the UK Pension our Tax Professional has allowed for deductions of further tax on my UK Pension, for both Federal and State. 

I have queried this with her several times and each time she insists that she has consulted with their International Taxation Specialist (it's a big, well-recognized firm) and each time she says that yes, I AM liable for further (US) tax on the amounts I am paid from the UK.

I am aware of the Double Taxation Agreement between the US and UK and I thought this Agreement was to avoid one being taxed twice on the same Pension.

Could anyone with experience of this please enlighten me, or point me to an exisiting forum on this topic?

Oh, by the way, I am not yet eligible for the UK State Pension, so I only have this one, from my former employer, currently.

My wife works full-time and I work part-time, both of us in the US. Our US returns are expressed as Married, Filing Jointly".

Many thanks !


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## JaneRN (Dec 6, 2009)

I would contact the Inland Revenue (UK), from what I have read on the link below I think you are exempt for tax in the UK, so have pay the tax US side. 

British Pension - Frequently Asked Questions

Pension providers automatically deduct UK tax from pension income as earned income. However the tax treaty between the UK and US allows for a US resident to apply to the UK Revenue and US IRS not to have UK tax deducted at source. This requires Form FD 13 to be submitted for approval. When approval has been given the pension income will then be assessed for US income tax.


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## saturn5man (Feb 6, 2010)

Thanks for that, Jane. I'll look into this further, as you suggest  

I guess it will boil-down to whether the total US tax on my UK pension (if I elect to receive that gross in future from the UK) will be more (or less) than the aggregate of the UK tax plus the additional US tax that I am currently paying on my UK occupational pension.


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## coolbadger (Sep 17, 2008)

*State Pension*



JaneRN said:


> I would contact the Inland Revenue (UK), from what I have read on the link below I think you are exempt for tax in the UK, so have pay the tax US side.
> 
> British Pension - Frequently Asked Questions
> 
> Pension providers automatically deduct UK tax from pension income as earned income. However the tax treaty between the UK and US allows for a US resident to apply to the UK Revenue and US IRS not to have UK tax deducted at source. This requires Form FD 13 to be submitted for approval. When approval has been given the pension income will then be assessed for US income tax.


I read your response with interest Jane.

Does that also apply to UK State pensions? I am just trying to get some idea for the future when I qualify.

Best wishes to you


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## JaneRN (Dec 6, 2009)

coolbadger said:


> I read your response with interest Jane.
> 
> Does that also apply to UK State pensions? I am just trying to get some idea for the future when I qualify.
> 
> Best wishes to you


Hi, I'm really not sure - I just found this site after doing a quick search, maybe if you follow the link it will direct you to the answer.
Jane


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## coolbadger (Sep 17, 2008)

JaneRN said:


> Hi, I'm really not sure - I just found this site after doing a quick search, maybe if you follow the link it will direct you to the answer.
> Jane


Dang! I thought you were an expert!

Thanks Jane

Best wishes to you


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## saturn5man (Feb 6, 2010)

coolbadger said:


> Dang! I thought you were an expert!
> 
> Thanks Jane
> 
> Best wishes to you


Well, I *paid* for an 'expert' but I am still not convinced that what she has told me is correct. Any other views, anyone?


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## Fatbrit (May 8, 2008)

saturn5man said:


> Well, I *paid* for an 'expert' but I am still not convinced that what she has told me is correct. Any other views, anyone?


I'm with Jane. Metaphorically rather than biblically, though.


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## saturn5man (Feb 6, 2010)

Fatbrit said:


> I'm with Jane. Metaphorically rather than biblically, though.


Thanks, FB. I bet Jane's pleased too ;-)


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## JaneRN (Dec 6, 2009)

saturn5man said:


> Thanks, FB. I bet Jane's pleased too ;-)


yes she is!


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## JaneRN (Dec 6, 2009)

Just saw this on another site, it's a link to the HMRC - tax enquiries for non UK residents


HM Revenue & Customs : Contact Us


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