Tax Query re pensions

Hi, my husband (us citizen) has just started a new job and is in an employee contribution pension. Tax season is here now so he is getting ready to file his taxes. Does he need to declare this? It confuses me! Just wanted to check… he’s paying in like £50 or so a month. I just wasn’t sure if pensions need to be declared?

What my son does is use the FEIE form 2555 to exclude his UK income but includes the employer contribution to his pension plan in the total compensation.  He matches the employer contribution but doesn't exceed it.

He reports the highest balance of his pension plan on his FBAR.

What my son does is use the FEIE form 2555 to exclude his UK income but includes the employer contribution to his pension plan in the total compensation.  He matches the employer contribution but doesn't exceed it.

He reports the highest balance of his pension plan on his FBAR.

Thank you! We will have a look at that. This sounds silly but he’s not sure on what his balance in the pension plan would be, could he just put 0?

Thank you! We will have a look at that. This sounds silly but he’s not sure on what his balance in the pension plan would be, could he just put 0?

Yes, he can put zero if he doesn't know the value.

My son's plan is managed by Scottish Widows and he can log on and see the balance.

That’s excellent thank you. I’ll see if he can login to his aswel!

Another thing I wasn’t sure on. He worked for the NHS so last year January - September he was automatically enrolled in their pension too.. he has the payslips to show the amount he paid in, would that also go on the FBAR somewhere? 
I was thinking do we add the NHS contributions & then the ones from his new job together and put that in the 1040 contribution box?

Thank you again for helping me with this!

That’s excellent thank you. I’ll see if he can login to his aswel!

Another thing I wasn’t sure on. He worked for the NHS so last year January - September he was automatically enrolled in their pension too.. he has the payslips to show the amount he paid in, would that also go on the FBAR somewhere? 
I was thinking do we add the NHS contributions & then the ones from his new job together and put that in the 1040 contribution box?

Thank you again for helping me with this!

I believe so.  Below are the instructions for form 2555, see section IV on foreign income.

He uses TurboTax to prepare and file his return and has so far only had 1 job  to exclude.

https://www.irs.gov/pub/irs-pdf/i2555.pdf

I had questions just like the ones you have. In reality there are many differing views on how to report. I decided to seek out an International Tax firm that specialise in U.K. residence issues for Americans (CPA). Their professional advice was that U.K. pension plans are qualified under IRS. You can deduct or exclude your contributions. The employer contributions and tax relief is not reportable. Finally it makes no difference who contributes more.

I had questions just like the ones you have. In reality there are many differing views on how to report. I decided to seek out an International Tax firm that specialise in U.K. residence issues for Americans (CPA). Their professional advice was that U.K. pension plans are qualified under IRS. You can deduct or exclude your contributions. The employer contributions and tax relief is not reportable. Finally it makes no difference who contributes more.

Excellent, thanks for that info, particularly about it not being an issue contributing more than the employer. I think it was here that I heard that contributing more than the employer would create a foreign grantor trust that required extra reporting.

Here is a discussion about the issue.

https://talk.uk-yankee.com/index.php?topic=91810.0

Here's what my tax attorney has advised. It's still subjective, but here's a stance we have taken. My SIPP is considered a pension for purposes of the treaty as more than 50% of the contributions were made by a company, and not personal contributions. Therefore, it's not considered a foreign grantor trust and no PFIC reporting. I report the profits on the SIPP on my 8833 so as not to pay tax on it until withdrawal. I've done this for my last 4 tax returns with no issues.

Excellent, thanks for that info, particularly about it not being an issue contributing more than the employer. I think it was here that I heard that contributing more than the employer would create a foreign grantor trust that required extra reporting.

Here is a discussion about the issue.

https://talk.uk-yankee.com/index.php?topic=91810.0

Thank you both! It totally goes over my head. It’s so confusing! Does a 8938 form need to be filled out too?!

Thank you both! It totally goes over my head. It’s so confusing! Does a 8938 form need to be filled out too?!

Only if you meet the limits. Almost certainly it should be included in an FBAR each year.

https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets

  If you are a taxpayer living abroad you must file if:
 
You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Only if you meet the limits. Almost certainly it should be included in an FBAR each year.

https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets

Thank you. Also, with my husbands previous NHS contributions, it was a temporary job for during the pandemic and since he’s left now, he has the opportunity to claim back the money that went in to this; so should he really put that pension contributions on this years tax form since he’ll be getting the money back… would he just add that to his income for next years form if that makes sense? Or should he speak to the tax office about that?

Sorry for all the questions!!  < this is me haha!!

Thank you. Also, with my husbands previous NHS contributions, it was a temporary job for during the pandemic and since he’s left now, he has the opportunity to claim back the money that went in to this; so should he really put that pension contributions on this years tax form since he’ll be getting the money back… would he just add that to his income for next years form if that makes sense? Or should he speak to the tax office about that?

Sorry for all the questions!!  < this is me haha!!

I don't know the answer but my guess is this.

If he reclaims his pension contributions during the US tax year then his annual income to report would be minus the contributions.  If it is after the US tax year ends then no, as I believe both the IRS and HMRC work on a cash basis.

I don't know the answer but my guess is this.

If he reclaims his pension contributions during the US tax year then his annual income to report would be minus the contributions.  If it is after the US tax year ends then no, as I believe both the IRS and HMRC work on a cash basis.

Thank you!

We are going to file this week! so, pension distributions, have I got this right that it just gets added on to the total income in the employment? so it’s all within the gross pay with the taxes and stuff? 

Thank you!

We are going to file this week! so, pension distributions, have I got this right that it just gets added on to the total income in the employment? so it’s all within the gross pay with the taxes and stuff?

That is what my son does, adds his employer contributions to his gross pay, then excludes it all with form 2555.

That is what my son does, adds his employer contributions to his gross pay, then excludes it all with form 2555.

Thank you so so much!