# Tax Treaty



## Clarebarr (Dec 14, 2011)

Do I have to use Form 8833 as a Dual citizen UK/US, UK resident? I will be claiming Foreign Tax Credit for my small UK income plus IRA withdrawals (which I've paid UK tax on). 
Also, do I have to pay tax on the IRA withdrawals even though I won't owe tax when I've done my return with the FTC. Thanks!


----------



## Bevdeforges (Nov 16, 2007)

I wouldn't bother with the form 8833 unless you're taking a somewhat "exotic" treaty position.

Foreign Tax Credit is a stock standard way to eliminate your double taxation and in some senses has absolutely nothing to do with the tax treaty.

Technically speaking, you declare the IRA withdrawals as pension income, then take the FTC for the tax paid on the withdrawals to the UK government. If you don't owe any taxes, that's fine. You've just proved as much to the IRS. And, if you paid more taxes to the UK than you would have done to the IRS, you can carry over your FTC credit just in case you need it next year.

Generally speaking, if you don't owe tax on it and you don't bother declaring it, it's highly unlikely the IRS will come looking for you. The risk, however, is that since a 1099 has been sent to the IRS, they may at least ask the question at some point and that can get nasty. Safest is to declare it, take your FTC - and just prove to them that you don't owe them anything. 
Cheers,
Bev


----------



## Clarebarr (Dec 14, 2011)

Thank you, Bev. All the answers I was hoping for. Do I fill in two 1116, one with earned income in general b category, and IRA income in d?


----------



## Bevdeforges (Nov 16, 2007)

Clarebarr said:


> Thank you, Bev. All the answers I was hoping for. Do I fill in two 1116, one with earned income in general b category, and IRA income in d?


I'm no expert on the 1116 form, but as I understand it, yes, you do a separate form for "earned" income and one for "passive" income (like the IRA withdrawals).
Cheers,
Bev


----------

