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Topic: Withdrawals from US IRA while living in UK  (Read 1148 times)

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Withdrawals from US IRA while living in UK
« on: April 04, 2014, 04:19:14 PM »
We anticipate moving to the UK next summer, my spouse on a Tier 2 general visa.   While there I plan on continuing to provide some online consulting services to US firms, on which I understand that I need to pay UK taxes.

What tax implications are there if I take periodic withdrawals from my US IRA rollover while we are in the UK?   I am past 59 1/2 and the account was funded with pretax dollars so if I was living in the US I would just expect to pay normal income tax on the withdrawals.   I'm curious about whether there are any additional considerations if I'm in the UK.


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Re: Withdrawals from US IRA while living in UK
« Reply #1 on: April 04, 2014, 04:40:40 PM »
What is your citizenship?


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Re: Withdrawals from US IRA while living in UK
« Reply #2 on: April 04, 2014, 04:58:12 PM »
Sorry, US.


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Re: Withdrawals from US IRA while living in UK
« Reply #3 on: April 04, 2014, 05:15:29 PM »
Traditional IRA withdrawals are UK and US taxable, but if you qualify to use the remittance basis, you may be able to avoid UK tax (subject to you not remitting the money to the UK of course).

Roth IRA withdrawals are always US and UK tax free.


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Re: Withdrawals from US IRA while living in UK
« Reply #4 on: April 04, 2014, 08:00:44 PM »
Please forgive me if I seem a bit dense about this, but I'm still trying to get my head around these earnings and tax issues.

If I take funds out of my US IRA account and have them sent to the UK, I would be subject to taxation in both countries?  But would the tax treaties allow me to deduct the tax paid in the UK from the tax due in the US?

I guess the same question applies to the funds I would earn in the US working online from the UK.   I already get the fact that "if I press the keys in the UK", I owe tax in the UK on them.   As I understand it, I get a credit toward my US taxes for the UK taxes.   But if those funds are initially deposited to a US bank and then sent to the UK, would the act of bringing them INTO the UK trigger any additional tax ?


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Re: Withdrawals from US IRA while living in UK
« Reply #5 on: April 04, 2014, 08:18:17 PM »
Residence is critical in determining taxation.

1) Your US IRA administrator will withhold a minimum of 10% tax on your IRA distribution
2) The UK will then tax 90% of the distribution at income tax rates....this assumes you remit the money to the UK or are taxed on an arising basis.
3) You will defray your US taxes with the 10% withholding and any UK tax you have paid. So you should get a refund from the IRS.


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Re: Withdrawals from US IRA while living in UK
« Reply #6 on: April 04, 2014, 08:22:50 PM »

I guess the same question applies to the funds I would earn in the US working online from the UK.   I already get the fact that "if I press the keys in the UK", I owe tax in the UK on them.   As I understand it, I get a credit toward my US taxes for the UK taxes.   But if those funds are initially deposited to a US bank and then sent to the UK, would the act of bringing them INTO the UK trigger any additional tax ?

Your residency is important when it comes to your consulting. You will pay tax in the UK on money you earn from US clients. You must also pay UK payroll taxes....ie National Insurance. Be careful when it comes to doing your US taxes as you don't have to pay US payroll taxes.

Bringing IRA money into the UK would trigger UK tax if you are taxed on a remittance basis.


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Re: Withdrawals from US IRA while living in UK
« Reply #7 on: April 04, 2014, 09:38:50 PM »
Thanks, nun.   I think I've got it now.   On my consulting work, I will report the income in the UK and pay UK tax on it, even though I will be accepting payment in US funds in the US.   If I move those funds to the UK (by a wire transfer, for instance), that won't trigger any additional taxes or fees or fines or whatever (beyond the bank fees).

Although my consulting business isn't large, my clients are all anxious that I should continue providing them with services after we move.  Before I commit to doing that I want to make sure that it's not going to cost me so much that I'd be better off not doing it.

Again, I really appreciate the help.   As we make our way along this process I so often feel as if I don't even know the questions I should be asking!


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