I'm a naturalised US citizen having to do taxes as a single person for the first time this year. My American income I know how to handle, but my British income is the question. I'm retired, my British income is a combination of state old age pension, state disability allowance, a company pension and a very small government payment in respect of a pension scheme which went broke. I have received conflicting advice from various (reputable!) sources as to how this income should be treated. It is all taxable in the UK, but I believe that the personal allowance everybody gets would mean that I would pay no tax on it if still living in the UK.
The question is :- Does the IRS just count this all as foreign income from a pension scheme, or is there any allowance made (as with SSA income in the USA) for the state benefits?
