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Level 3

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

I was born in the UK and have been permanently resident in the US and a US citizen for 20+ years. I now get a UK pension for the years I worked in the UK as a UK citizen before coming to the US. My questions are, for taxable income purposes,  (a) can I deduct the contributions I paid into my UK pension from the taxable income of this pension  and (b) can I also deduct the contributions my employer paid into my UK pension fund from the taxable income of this pension  .  Both the above contributions were made while I was in the UK (and a UK citizen).

8 Replies
Level 1

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

It depends-

According to the IRS, your contributions and your employer's contributions to a foreign pension are not part of your cost if the contribution was based on compensation for services performed outside the United States while you were a nonresident alien and not subject to income tax under the laws of the United States or any foreign country (but only if the contribution would have been taxable if paid as cash compensation when the services were performed).

Therefore if the UK pension contribution were made tax free while a UK citizen, then you will not be able to claim any deductions in the US for these UK pension contributions.

Please click this link for more information on IRS - Foreign Pension and Annuity Distributions

If this is a UK governmental pension, you would be able to claim a treat exemption on From 8833 (statement to claim a treaty exemption) which you would attach to your mailed in tax return. You would still include the amount on your return under the social security section but you would also include a negative amount for this UK governmental pension on line 21 and the description should read "Tax exempt under US-UK tax treaty Article 17")

To enter the treaty exemption amount in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "other reportable income" in the search bar then select "jump to other reportable income". TurboTax will guide you in entering this information.

Level 3

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Thanks.  So if these contributions were made with after tax payments i.e. I had already been taxed in the UK on those contributions, then I could them as a deduction from the income, correct ??   ALso, as this is a UK Government Pension, do I report the income as Social Security income (using SSA-1099) or as Pension income
Level 1

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Since this in a UK government pension, you will be able to claim a treaty exemption for the entire amount. You will report the full amount of the pension under the social security income section and then report the same amount (as a negative amount) as other income on line 21 of your 1040. You will also need to attach a form 8843 (which is not supported by TurboTax) to a file by mail copy of your return.

I have updated my answer to include this additional information.
Level 3

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

To clarify:  I am permanently resident in the US and now a US citizen.  I can report the UK government Pension as Social Security  (vs pension income).  I do not pay taxes on the UK pension in the UK (since I am permanently resident in the US). Can I still report the negative amount on line 21  ??
Level 1

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Yes, but only to the extent of the UK pension amount that is included as part of your taxable income.
Level 3

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Thanks:  BTW did you mean form 8833 (above you noted 8843)
Level 1

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Yes - Thank you 🙂 I have updated my post to include the correct link
Level 1

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Thanks for the info, it was very helpful.