I am still trying to figure out how to pay UK/US taxes on US pensions - SS income, RMD, and Roth conversions, for a double UK/US citizen, resident in UK.
1) SS pension is reported to UK and taxed in UK, but it is not taxable income for US (but where to report to US on 1040 that it is not taxable by treaty??)
For UK: Article 17b of U/US treaty says:
"the amount of any such pension or remuneration paid from a pension scheme established in the other Contracting State that would be exempt from taxation in that other State if the beneficial owner were a resident thereof shall be exempt from taxation in the firstmentioned State."
I read it so that, since only 85% of SS is taxed in US, UK should also only tax 85% of US SS income. But it seems from my online search that people report 100% of US SS income as taxable in UK. Why? Anyone has an experience with that?
2) RMD from 401K is taxed in UK, and credit is taken for US. What about partial rollovers to Roth? Say, he rollovers not all, but half of a specific fund (He owns several 401K)? Is it lump sum or not? (I.e., is it taxable in UK or not?)
3) He might file UK tax on remittance basis this year - he will have to pay surcharge, since it is 8-th year in UK, but it is still less then UK tax to be paid on combined RMD and SS from 22-23 UK tax year (he works in UK, and is high earner).
< All his US SS/401K money are received on his US accounts. The payments received could be used to pay tax for Roth conversion, and hence will never be remitted to UK>
In this case, would would happen with US tax?
Will his SS income from USA still be considered non-taxable in US?
Will his RMD from 401K still be considered by IRS as "foreign income" (as "income resourced by treaty") - so that he can cover US tax on it by credit from his other UK taxes?
Or will they both magically become "US income" in this case?