.................. there is still so much debate about whether the US taxes that 25% lump sum!
Has this been concretely resolved since this thread began?
I suppose I am asking whether:
(1) the IRS has issued a definitive and deterministic answer specifically about this question?........
No, there has been no further guidance.
This is the latest interpretation on this site:
https://talk.uk-yankee.com/index.php?topic=98575.msg1303483#msg1303483See reply #1 from Dunedin:
"The taxing rules are as follows-
• The full terms of the UK US double tax treaty do not apply, as you are a US citizen. This is provided for in Article 1(4) of the treaty, the savings clause.
• Article 1(5) lists some treaty provisions that still apply. These include Article 17(1).
• The lump sum commutation is tax exempt in the UK. Therefore Article 17(1)(b) then requires that the US is to respect the UK tax exemption, but only if the recipient is a US resident.
• As you are UK resident, you are outside the protection of Article 17(1)(b) and so the commutation is US taxable."[Bold mine]
