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I HAVE A MARRIED TAXPAYER WHO IS A BRITISH CITIZEN AND A US

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RESIDENT. HE HAS SOCIAL...
I HAVE A MARRIED TAXPAYER WHO IS A BRITISH CITIZEN AND A US RESIDENT. HE HAS SOCIAL SECURITY INCOME FROM UK NON TAXED, UK MILITARY PENSION THAT IS TAXED IN UK AND SOME OTHER PENSION AND ANUITIES THAT ARE TAXED IN THE UK. HE IS ASKING ME WHAT IS TAXABLE IN THE US. IF TAXABLE THAN I ASSUME HE WOULD GET FOREIGN TAX CREDIT FOR WHAT IS TAXED IN THE UK. HIS WIFE IS A US CITIZEN AND IN THE PAST SHE FILES MARRIED FILING SEPARATELY.
Submitted: 7 years ago.Category: Tax
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11/2/2010
Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago
Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience: 20 years of working with income and estate tax issues for families and businesses.
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As US residents they are taxed on worldwide income. So it will include all income. They would get the foreign tax credit for taxes paid to UK. As far as the social security and pension, you should look to the tax treaty between the US and UK. Most likely the US will respect the not taxable treatment here.

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Customer reply replied 7 years ago
would like to know tax treatment of uk social security.
Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago

Pensions

Under the new treaty, pensions and Social Security payments generally are taxable only in the country of residence. (This is the same treatment as under the current treaty.) The new treaty also provides that the country of residence will not tax pensions received from the source country that would be exempt from tax in that country if the recipient were a resident of such country. The new treaty provides that only the source country will tax lump-sum payments.

 

This is a summary of the US UK tax treaty provisions regarding pension and social security. They are not taxable in the US. When they are reported on the US tax returns a reference to the treaty and the fact that they are not taxable should be disclosed. You can find the complete treaty at IRS.GOV

Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
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Experience: 20 years of working with income and estate tax issues for families and businesses.
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Tax Professional: Brenda Guy, Certified Public Accountant (CPA) replied 7 years ago
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