US tax on dividends for double citizen resident in UK

Dear all:
I am trying to figure out US tax on US dividends (from US brokerage account)  for US/UK citizen resident in UK.
This is the 1st year I have this issue so it is all new for me. The amount of dividends is between 2K and 3K pounds.

Double taxation US/UK treaty says that UK resident only pays up to 15% tax on US based dividends, so initially I thought that I should
-- calculate US  tax on dividends at 15% and add irs form 8833 to explain that I take the treaty position
-- for UK tax apply those 15% to reduce my UK tax

But it seems that article on dividends is not covered as an exception to US position that it can tax US citizens in full (contrary to pensions)  - so what is the correct approach? Something like:
-- do US tax counting dividends as US income and pay full US tax on it?
--  claim all this tax (which will be more then 15%) on UK tax return?

Or?

Any help very much appreciated

This is what I believe should happen for a US citizen living in the UK. When filing taxes with HMRC declare the US dividends as dividends and pay UK tax on them. The first £2,000 is tax free, then taxed at either 8.75% or 33.75% depending on which tax band you fall  into.

https://www.gov.uk/tax-on-dividends

When filing your IRS return you will claim any UK tax paid as a foreign tax credit using IRS form 1116.  You will check the box labeled “Resourced By Treaty” which tells the IRS that although this income is US income it is being treated as foreign income as per the US-UK tax treaty.

Thanks!
I am not sure you are right though.
It seems to me that the US-UK treaty does not re-source US dividends for UK residents (like it does with pensions and SS income). Instead it says that US may tax US sourced dividends, but only at the rate up to 15%.

Article 10:
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the dividends are beneficially owned by a resident of the other Contracting State, the tax so charged shall not exceed, except as otherwise provided,
(a) 5 per cent. of the gross amount of the dividends if the beneficial owner is a company that owns shares representing directly or indirectly at least 10 per cent. of the voting power of the company paying the dividends;
(b) 15 per cent. of the gross amount of the dividends in all other cases.

So if I would be not a US person, but UK resident receiving US dividends, then US would have right to tax them, but only up to 15% rate,  and I would be able to claim this US tax on my UK tax return as foreign tax paid
Now, since I am US person, US can tax me in full - so it seems to me I have to pay full US tax on US sourced dividends, even if it is more then 15% rate, and cannot claim it as resourced income by treaty.. (but can use US tax paid against UK tax liability).

There is of course also article 24 which explains how double taxation relief is granted, - and it might be that there are some implications there that dividends are resourced by treaty - but I must admit I am lost there and do not fully understand its meaning..

This is what I found on HMRC website (but it is clearly a case of someone who is not US person)
https://community.hmrc.gov.uk/customerforums/sa/3785f2e0-0b8d-ed11-97b2-00155d3ba57b

Thanks!
I am not sure you are right though.
It seems to me that the US-UK treaty does not re-source US dividends for UK residents (like it does with pensions and SS income). Instead it says that US may tax US sourced dividends, but only at the rate up to 15%.

Article 10:
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the dividends are beneficially owned by a resident of the other Contracting State, the tax so charged shall not exceed, except as otherwise provided,
(a) 5 per cent. of the gross amount of the dividends if the beneficial owner is a company that owns shares representing directly or indirectly at least 10 per cent. of the voting power of the company paying the dividends;
(b) 15 per cent. of the gross amount of the dividends in all other cases.

So if I would be not a US person, but UK resident receiving US dividends, then US would have right to tax them, but only up to 15% rate,  and I would be able to claim this US tax on my UK tax return as foreign tax paid
Now, since I am US person, US can tax me in full - so it seems to me I have to pay full US tax on US sourced dividends, even if it is more then 15% rate, and cannot claim it as resourced income by treaty.. (but can use US tax paid against UK tax liability).

There is of course also article 24 which explains how double taxation relief is granted, - and it might be that there are some implications there that dividends are resourced by treaty - but I must admit I am lost there and do not fully understand its meaning..

Looks like you are on top of it, I agree with your assessment. I’ve never had CGs and dividends.

SS income to a USC in the UK is only taxed  in the UK so foreign tax credits don’t come into play. On the IRS return on the 1040 SS is shown but the taxable amount is listed as zero.

I do have US private pension income and that is resourced as foreign income and foreign tax credits applied on the IRS return.

Thanks!
Indeed SS is excluded from US right to tax US citizens altogether, and it seems private pensions (like 401K) should be resourced.
As for dividends, it is a bit creasy.. Reading article 24 (Relief from double taxation):

2. For the purposes of applying paragraph 1 of this Article,
(a) subject to sub-paragraph (b) of this paragraph, an item of gross income, as determined under the laws of the United States, derived by a resident of the United States that, under this Convention, may be taxed in the United Kingdom shall be deemed to be income from sources in the United Kingdom

This seems to indicate that ANY income I have, including income from US sources, can be re-sourced by treaty - no?
I remember reading somewhere a discussion that US citizen UK resident who is sent on a short business trip to US can use treaty to deem salary they get during that trip as arising from UK sources...

However, there is also:

part 6b,c,d:
(b) in the case of profits, income or chargeable gains from sources within the United States, the United Kingdom shall take into account for the purposes of computing the credit to be allowed under paragraph 4 of this Article only the amount of tax, if any, that the United States may impose under the provisions of this Convention on a resident of the United Kingdom who is not a United States citizen;
(c) for the purposes of computing United States tax on the profits, income or chargeable gains referred to in sub-paragraph (b) of this paragraph, the United States shall allow as a credit against United States tax the income tax and capital gains tax paid to the United Kingdom after the credit referred to in sub-paragraph (b) of this paragraph; the credit so allowed shall not reduce the portion of the United States tax that is creditable against the United Kingdom tax in accordance with sub-paragraph b) of this paragraph; and
(d) for the exclusive purpose of relieving double taxation in the United States under sub-paragraph (c) of this paragraph, profits, income and chargeable gains referred to in sub-paragraph (b) of this paragraph shall be deemed to arise in the United Kingdom to the extent necessary to avoid double taxation of such profits, income or chargeable gains under sub-paragraph (c) of this paragraph.

This seems to say that HMRC would only allow 15% credit on US tax (which might be enough for me this year, since they only tax part which is above £2000)
But assuming there is some residual UK tax I have to pay after this credit is given - can I use it on 1116 as credit against part of US tax which is over 15%?
I.e. probably the way to do it is
- HMRC: report all amount X of dividend to UK, and ask for 15% of the total X to be applied towards UK tax which is levied on X-2000
- IRS: calculate US tax on all amount X, and use form 1116 to claim credit for UK taxes I paid, against any US tax above the 15% rate

Sounds a bit too much though..

In addition, since UK tax rate on dividends is higher then US tax rate probably it should go on form 1116 not as an income resourced by treaty but as a "highly taxed income" which is assigned to general category 1116
I am loosing my head here..

In addition, since UK tax rate on dividends is higher then US tax rate probably it should go on form 1116 not as an income resourced by treaty but as a "highly taxed income" which is assigned to general category 1116
I am loosing my head here..

I think that very much depends on individual circumstances.  Most investors in the UK pay 8.75% on dividends with the first £2,000 being free of tax.

In the USA most investors pay 15% on all of their qualified dividends

https://www.investopedia.com/terms/q/qualifieddividend.asp#:~:text=Qualified%20dividends%20must%20meet%20special,years%20maxes%20out%20at%2037%25.

A qualified dividend is an ordinary dividend that can be reported to the IRS as a capital gain rather than as income.

For some but not all taxpayers, that is a significant saving in taxes owed on the dividends. Most taxpayers pay a 15% tax on capital gains, according to the IRS. Individuals earning over $83,550 pay at least a 22% tax on income as of the 2022 tax year, while individuals earning less than that pay no more than 12% income tax

https://www.gov.uk/government/publications/reduction-of-the-dividend-allowance/income-tax-reducing-the-dividend-allowance#:~:text=At%20Autumn%20Budget%202021%2C%20the,additional%20rate%20from%20April%202022.

At Autumn Budget 2021, the government announced that the rate of Income Tax applicable to dividend income would increase by 1.25 percentage point to 8.75% for the ordinary rate, 33.75% for the upper rate and 39.35% for the additional rate from April 2022.

The calculations have been quite different for us as a married couple. Before moving back to the UK in 2016 we had moved all our qualified dividend funds into an HMRC reporting fund and put it only in my wife's name.  Since then we have been paying 15% tax on the dividends in the USA and 0% in the UK.  This is because our joint income puts us in the 15% US bracket but until last year my wife was receiving no income other than dividend income. (She is now receiving UK OAP and US SS).  The dividend tax free allowance has slowly been reducing but back in 2016/17 it was £5,000, which when added to her personal allowance put it over £17,000.  We have also been drawing down that fund, selling shares each year and again paying less taxes to HMRC than to HMRC because unless you are a higher rate taxpayer (> ~£50,000) you get over £12,000 tax free then the gain taxed at 10%.  Those gains have been taxed at 15% by the IRS since we file jointly.