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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13316
Experience:  15years with H & R Block. Divisional leader, Instructor
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Hi I have recently moved to NYS, USA from the UK. I have retired

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Hi I have recently moved to NYS, USA from the UK. I have retired in the UK and will be transferring around $180,000 which is a lump sum payment from my work pension scheme (firefighter) that I have been paying into for 30yrs. Can you please tell me what are my tax obligations?

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
The transfer of money from the UK to the US is not a taxable event. If you were a US person (resident alien) when you received the payment then you would need to report the payment but you may not have any tax to pay.
The taxable amount of a foreign pension for a US person, generally is the Gross Distribution minus the Cost (investment in the contract).
If you were not a US person you would not be required to report the payment in the US.

Robin D. :

If you were a US person (resident alien or citizen) when you received the payment then treaty provisions may apply. As a general rule, the pension/annuity articles of most tax treaties allow the country of residence (as determined by the residency article) to tax the pension or annuity under its domestic laws. This is true unless a treaty provision specifically amends that treatment.

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.

Customer:

ok just to clear this up...

Robin D. :

Yes?

Customer:

I am a uk citizen but am now a US resident as im getting marrid here in a coupe of weeks

Customer:

yuk at my spelling/typing lol

Robin D. :

Have you received the payment already?

Robin D. :

I won't look at your spelling if you do the same for me

Customer:

no I get the money on 25th Oct

Customer:

my actual retirement date is 24th oct... but my employer owed me some time off

Customer:

so im here in the usa but my money isn't yet!

Robin D. :

Ok, then you will report the total on your US return but the taxable amount will only be the earnings. So all your contributions will be tax free

Robin D. :

I need to look at the treaty though so one sec............

Customer:

does that include the monthly amount I will be receiving from my firefighter pension from the uk as well?

Robin D. :

Yes it will

Customer:

I did read something about a double taxation treaty

Robin D. :

Your residency decides who gets to apply tax. Yes there is a provision for double taxation. Will teh UK tax your pension in the UK while you are not a resident?

Robin D. :

If so then the US allows for a credit

Customer:

ok I think I have to fill in some UK tax forms to make sure that happens

Robin D. :

For the US you will use Form 1116 when you file.

Robin D. :

ARTICLE 17
Pensions, Social Security, Annuities, Alimony, and Child Support
1. a) Pensions and other similar remuneration beneficially owned by a resident of a
Contracting State shall be taxable only in that State.

Customer:

I was just worried that I was going to be hammered for tax as soon as I transferred my lump sum of cash

Robin D. :

No when you tranfer the tax is not applied

Robin D. :

You will declare income when you file in the US

Customer:

ok fantastic :)

Robin D. :

Just make sure you use a preparer that understands the procedure

Customer:

so the transfer of my lump sum is not counted as income for tax purposes when I file?

Customer:

finding a tax preparer is a whole other question lol

Robin D. :

The transfer is irrelevant but the amount you receive will need to be reported on your tax return. You will show the total as a pension but then the taxable amount is only what you did not contribute.

Robin D. :

Not really

Robin D. :

You should not have a problem in NY

Robin D. :

Just make sure and ask them if they understand teh procedure

Customer:

ok thank you very much for your help... you are a star

Robin D. :

You are most welcome.
Your positive rating is always thanks enough.

Robin D. :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
You will find the request feature when you come back under your MY QUESTIONS section.

Customer:

ok great thank you... just copying and pasting to make sure lol

Robin D. :

It will remain in your My Questions too. SO you can always find it there when you log in

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