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alansaff
Level 2

Federal Tax On UK pension

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 on my federal return, together with UK taxes deducted, or is it exempt under the US/UK tax treaty?

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Accepted Solutions
Destiny_Y_JD
Employee Tax Expert

Federal Tax On UK pension

I do apologize for misunderstanding your question. 
As long as you are considered a US citizen then the answer is yes. 

IRS states: Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits. Please refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for additional information. 


Yes the pension will have to be reported on the US tax return, but the tax treaties can make it complicated. Because in addition to adding it on your 1040 you might have to file form 8833 along with FBAR and FATCA depending on your exact situation. 

Instructions to add foreign pension in TurboTax online program: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/where-to-enter-foreign-pension-i...

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3 Replies
Destiny_Y_JD
Employee Tax Expert

Federal Tax On UK pension

An agreement between the United States and the United Kingdom (U.K.) improves Social Security protection for people who work or have worked in both countries. It helps many people who, without the agreement, would not be eligible for monthly retirement, disability or survivors benefits under the Social Security system of one or both countries. It also helps people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

SSA provides a great chart of which country would pay social security and how it is determined at https://www.ssa.gov/pubs/EN-05-10199.pdf

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alansaff
Level 2

Federal Tax On UK pension

Thanks for this but my question relates to whether my UK pension income needs to be reported on my US tax return or whether such income is exempt altogether and does not need to be reported to the US at all. I will report my UK pension income on my UK tax return. Thank you.

Destiny_Y_JD
Employee Tax Expert

Federal Tax On UK pension

I do apologize for misunderstanding your question. 
As long as you are considered a US citizen then the answer is yes. 

IRS states: Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits. Please refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for additional information. 


Yes the pension will have to be reported on the US tax return, but the tax treaties can make it complicated. Because in addition to adding it on your 1040 you might have to file form 8833 along with FBAR and FATCA depending on your exact situation. 

Instructions to add foreign pension in TurboTax online program: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/where-to-enter-foreign-pension-i...

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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