Hi, I hope someone can advise.
I was a UK citizen up to 2005, when I emigrated to the United States. I am now a U.S citizen.
Back in the UK, I had a defined benefit pension through my employer. When I left my job to come to the States, the pension was frozen. At that time, the annual pension from the scheme would have been GBP 4,804 – since then, it has increased slightly each year in line with prices.
It's rather late in the day for this, I know, but should I have been including this pension on my tax return? It hasn't ever occurred to me... to be honest, I had forgotten the pension even existed.
If I am supposed to be including it on my tax return, what should I do to rectify the error, and is it likely I will get in serious trouble with the IRS? I'm in rather a panic about that.
The reason I've thought about the pension at all is because I'm considering taking early retirement from the scheme in the next year or so, to supplement my U.S. salary. If I were to do this, would the distributions be taxed here in the States, or in the UK? I'm also wondering about the status of a lump-sum payment – this would be tax-free in the UK, but would I need to pay tax on it here in the States?
I would be so incredibly grateful for any advice...
