I am a US citizen living in the UK (and have done for many years). I do not receive US SS but am shortly to receive a UK state pension.
Do I need to report this state pension income on my US federal return, together with UK taxes deducted, or is it exempt under the US/UK tax treaty?
I believe it is exempt as IRS Publication 901, page 33 on Tax Treaties states:
“Pensions paid by, or funds created by, the United Kingdom, its political subdivisions, or local authorities for services performed for the United Kingdom are exempt from U.S. income tax unless the recipient is both a resident and citizen of the United States. These exemptions do not apply to income or pensions for services performed in connection with a business carried on by the United Kingdom, its political subdivisions, or local authorities.”
I am not a resident and citizen of the United States. If my opinion is correct, it contradicts your earlier advice given when I asked the same question last year. The link below refers:
