UK Pension distribution

Forum|Forum|2 years ago
April 30, 2024
1 reply
0 views

I am a US citizen currently retired. I lived and worked in the USA for the past 40+ years. I have a pension plan from my earlier life from the UK and currently receive a small UK State pension (included in prior returns under 'other income' and paid income tax) and recently started receiving a company pension (2023). The company pension includes a lump sum (PCLS) portion and a monthly annuity payment, both are paid to my Bank tax free in the UK. I wanted to use the TT full service to do my 2023 taxes for me, but they are telling me that they are not able to do my 2023 taxes as the IRS Form 8833 is not supported by TT!

My question is whether my company pension will be covered by the US-UK Tax Treaty, article 17, para 1(b) and not taxable in the USA? How do I enter my pensions on the TT2023 and what is the wording to show on the Form 8833? How do I find a professional to do my tax return?

JotikaT2

Since the pension is from a private company and not the U.K. government, your pension would be taxable within the United States. It would not be exempt under the treaty section you mentioned. Please see IRS Publication 901 and the excerpt shown below as it specifically relates to pensions from the United Kingdom.

In regards to the tax form, I believe you are referring to Form 8938 (instead of 8838). Form 8938 is used to report the value of any foreign financial assets and must be filed with your income tax return each year. Please see this link for instruction to include this form on your TurboTax return. Form 8838 would be used if you were filing a nonresident return that does not seem to apply to your situation.

The amount of your pension income would be reported under Income & Expenses in TurboTax.

Scroll down to the section titled Less Common Income.
Select start to the right of Miscellaneous Income, 1099-A, 1099-C.
Then select Other Reportable Income.
Follow the prompts and enter U.K. Private pension in the description and the amount received.

You can also file Form 1116 to obtain a foreign tax credit for any taxes paid in the U.K. that relate to the pension income that is also taxable in the United States. This will ensure you receive a credit for any taxes already paid to the U.K., if any, and will be used to offset the tax due on your U.S. tax return.

The IRS has information on their website here to help you locate a tax preparer.

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