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 UK state pension income on my US federal return, together with UK taxes deducted, or is it exempt under the US/UK tax treaty?
I am not a resident but I am a citizen of the United States.
I have asked this question before but am not clear about the answer. Thanks.
Hi Alan,
Yes, you will have to report your U.K. pension on your U.S. tax return. According to Article 17 of the US-UK tax treaty, the country of residence at the time of distribution has the sole right to tax the distribution, however there is a "saving clause" found in Article 1 (General Scope), under which the United States and the U.K. each reserve a right to tax their own citizens. Due to the saving clause, a U.S. citizen who is a resident of the U.K. and receives a pension payment will be subject to U.S. tax, despite the language in Article 17 of the US-UK tax treaty. https://home.treasury.gov/system/files/131/Treaty-UK-7-24-2001.pdf