Form 8833 and UK pensions

[gavinp3]

I am a US citizen and I have a specific question on UK Govt. pension and a private employee pension paid into my US bank account.. I do not think they are taxable in the UK. Can I claim a deduction on these using the Tax treaty and form 8833. It is not 100% clear to me when I read the instructions on the 8833 form.  Thanks in advance

Paul

[DavidD66]

All U.S. citizens and residents are subject to tax on their worldwide income.  This includes UK pensions. However, you can make an election to apply the US-UK Income Tax Treaty.  If you make a proper election on Form 8833, the 25% tax-free lump sum portion of your pension, formally known in the UK as the Pension Commencement Lump Sum (PCLS) that allows you to receive the first 25% tax-free.  The default rule is that it's 100% taxable in the U.S. unless and until you affirmatively elect to claim the benefits of the treaty.  A private employee pension would only be exempt in the US, if it was tax exempt in the UK.  

[gavinp3]

Thanks for your response I think you have answered the question on the 8833 and lump sum distribution. I still have a question on the monthly payments I received last year. Are these also covered in the 8833 and 1040 inputs or are they just defined as taxable income and not included in the treaty.

[LindaS5247]

Are your private pension payments what you are referring to as the "monthly payments you received last year? Your UK private employee pension payments are possibly taxable income. 

If they are not taxable in the UK is the key.  Do you know if your private pension is taxable in the UK?  

If the UK taxed it, you may not be subject to double taxation due to tax treaties with the U.S. to prevent double-taxation. 

If you're not a UK resident, you don't usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK.

To report your foreign pension in TurboTax follow these steps:

1. Log in to your TurboTax account if it is not open.
2. Select the Wages & Income tab.
3. Scroll down to Less common income click Show more.
4. On the page Let's Work on Any Miscellaneous Income click on Other reportable income.
5. On the page Any Other Taxable Income?  select yes.
6. On the page, Other Taxable Income enter Foreign Pension for the description and the amount.
7. Select continue and answer No on the next page.

Click here for additional information on the Taxation of Foreign Pensions.

[gavinp3]

Thanks again your answers I did some further checking, and both my UK government pension and private pension have not been taxed in the UK so I plan to include them as additional income not included in my W2 and 1099-