Taxation of UK pensions by US (and France)

Go Back   Expat Forum For People Moving Overseas And Living Abroad > Expat Forum General and International > Expat Tax

Expat Tax This forum is for tax related queries and discussions for all expats.

Taxation of UK pensions by US (and France)


Reply
 
Subscribe to this Thread Thread Tools
  #1 (permalink)  
Old 26th March 2018, 02:01 PM
New Member
 
Join Date: Nov 2015
Location: South of France
Posts: 7
Rep Power: 0
J4paws is on a distinguished road

Users Flag! Originally from usa. Users Flag! Expat in france.
Default Taxation of UK pensions by US (and France)

A hopeful request for some clarification and/or best case scenario before I submit our US tax return with the worst case scenario of everything taxable!

I am a UK National (born in UK and worked for many years in UK). I then moved to US, met my husband and became a US citizen (Naturalised). We are now retired and live full time in France.

My UK pensions - both State pension (like US Social Security pension) and other work related pensions are taxable in France rather than UK (UK - France tax treaty)
I have been trying to establish the exact situation with regard to my UK pensions as to whether they are fully, partly, or not at all taxable in the US.
After reading all 3 tax treaties: U.K./US , UK/France, US/France and researching as much as possible on the Internet Where I have found some very differing views and most relating to people resident in either UK or US the "waters look very murky" indeed and the situation is not totally clear. E.g. Does US / UK tax treaty have precedence over the others even though I am not a resident in either country, but a US citizen?

After trying to read all the exceptions, contradictions, etc of the tax treaties I fear I should perhaps consider the full gross amount of all my UK pensions as fully taxable
(Even if some is not taxable - too complicated to work out), which unfortunately means we have some tax to pay this year instead of zero tax.

Can anyone offer some clarification please?

Reply With Quote Quick reply to this message
  #2 (permalink)  
Old 26th March 2018, 07:19 PM
Bevdeforges's Avatar
Super Moderator
 
Join Date: Nov 2007
Location: deepest, darkest Essonne
Posts: 46,991
Rep Power: 23320
Bevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond repute
10064 likes received
1400 likes given

Users Flag! Originally from usa. Users Flag! Expat in france.
Default

To be real honest about it, if you're confused after reading all the relevant treaties, I think it's safe to assume that the IRS is at least as confused as you are.

Generally speaking, it's the UK that gets first crack at taxing US governmental pensions (i.e. those paid through the government). Private pensions are a whole different issue. If you're getting any US Social Security payments in there, those are only taxable by the IRS (though declarable on your French declaration - but see the instructions for form 2047 on details about how to declare those so they won't be taxed in France).

Either you simply don't declare your "foreign" pensions to the IRS - or you declare them, but claim them as "not taxable". Or you claim the Foreign Tax Credit for taxes you pay to France (or the UK) on your foreign pensions. Depending on the source of your pensions (public or private), you should probably just take a stance one way or the other, file your returns that way - and if they get back to you, you can always change things and pay up. But depending on the amounts involved, there's a reasonable chance they'll never bother.
Cheers,
Bev

Reply With Quote Quick reply to this message
  #3 (permalink)  
Old 26th March 2018, 07:32 PM
Member
 
Join Date: Mar 2015
Posts: 313
Rep Power: 0
JustLurking is on a distinguished road
54 likes received
27 likes given

Default

Quote:
Originally Posted by J4paws View Post
Does US / UK tax treaty have precedence over the others even though I am not a resident in either country, but a US citizen?
I think the answer may be that it won't help you even if it does.

Looking at this US/UK treaty flowchart for pensions, your UK state and private pensions are both taxable to the US because you are (unfortunate enough to be) a US citizen. In both cases the US negates the benefits for you by using the spiteful treaty 'saving clause' to disregard the parts of the treaty that you could use otherwise. You do get to claim a credit against French tax paid on these pensions, but from the sound of things this might not wipe out any US liability entirely.

Aside from the above though, I really have no idea how tax treaties work when more than two countries are involved. Sorry I cannot be more helpful.

Have you considered renouncing your US citizenship? From what you write it appears that it might currently be nothing but a financial millstone. Just a thought.


Last edited by JustLurking; 26th March 2018 at 07:34 PM.
Reply With Quote Quick reply to this message
Sponsored Links
Advertisement
 
  #4 (permalink)  
Old 26th March 2018, 07:43 PM
Bevdeforges's Avatar
Super Moderator
 
Join Date: Nov 2007
Location: deepest, darkest Essonne
Posts: 46,991
Rep Power: 23320
Bevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond reputeBevdeforges has a reputation beyond repute
10064 likes received
1400 likes given

Users Flag! Originally from usa. Users Flag! Expat in france.
Default

Just be advised that renouncing costs a whopping $2350, whereas a good faith attempt to declare but minimize the "damage" may simply get filed and registered, without any follow-up. It depends on the amounts involved, but there is no evidence that overseas residents' tax forms are being particularly strictly controlled, given all the other constraints on the IRS' time and budgets these days.
Cheers,
Bev

Reply With Quote Quick reply to this message
  #5 (permalink)  
Old 27th March 2018, 06:39 AM
New Member
 
Join Date: Nov 2015
Location: South of France
Posts: 7
Rep Power: 0
J4paws is on a distinguished road

Users Flag! Originally from usa. Users Flag! Expat in france.
Default

Many thanks for your helpful replies.

We do not want to renounce US citizenship.

Bev, I was thinking along the same lines as you until I started researching and got into all the confusing and contradictory details. So ..... I may just go back to that - declare in good faith while trying to minimise the damage.

Reply With Quote Quick reply to this message
Reply


Tags
us tax from abroad, us uk france tax

Quick Reply
Message:
Options

Register Now

In order to be able to post messages on the Expat Forum For People Moving Overseas And Living Abroad forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.
User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.
Password:
Confirm Password:
Email Address
Please enter a valid email address for yourself.
Email Address:
Location
Where you live
Expat From Country
Please select the country you originate from. This will appear as a flag when you make posts on the site.
Expat To Country
Please select the country you have either moved to or want to relocate to. This will be presented on the site when you make posts.

Log-in


Thread Tools

Posting Rules
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Avoiding double taxation on pensions UK & US iota2014 Expat Tax 11 24th November 2016 08:08 PM
Taxation on pensions garylosolivos Spain Expat Forum for Expats Living in Spain 0 10th January 2016 08:10 AM
Government pensions and dual taxation Ladyinred Spain Expat Forum for Expats Living in Spain 10 1st March 2014 03:53 PM
French Taxation of US/CDN Pensions stevev41 France Expat Forum for Expats Living in France 1 23rd August 2013 05:06 PM
UK Pensions to France Froman France Expat Forum for Expats Living in France 3 2nd May 2012 09:15 AM

FORUM PARTNERS

ExpatForum.com is owned and operated by VerticalScope Inc.

Retiring Overseas Guides | Moving Overseas Guides | Cost of Living | Health Care Guides


All times are GMT. The time now is 04:17 AM.


Powered by vBulletin®
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
Search Engine Friendly URLs by vBSEO
vBulletin Security provided by vBSecurity v2.2.2 (Pro) - vBulletin Mods & Addons Copyright © 2020 DragonByte Technologies Ltd.