In 2023, I received a lump sum payment in the low 5 figures, sent by the UK government. I got this payout because my late spouse never claimed their state pension (similar to social security) while they were alive, and it accrued for several years during their final stages of life.
I have documentation from the UK authorities stating clearly that this is an inherited sum, and the reasons for the inheritance. No UK tax was deducted since I am a US citizen/resident, and there is a double taxation treaty.
Question is: Should I consider this as income on my 2023 US tax return? Or should I consider it like any usual inheritance of this magnitude, which would not be taxable in the US?
Thank you
