Amend previous returns to include employer pension contribution?

Interesting first post.

I have a feeling that the original poster (grupt) is in the same situation as me.  I'm in the
University Superannuation scheme where I contribute 6% to my pension and the university contributes 14% to the scheme.  The tax treaty allows me to exclude that income from my gross earnings on line 7.  I spoke to the tax law person at the Philidelphia IRS office about whether I need to fill out form 8833 to take the treaty based return position to do this.  He said it is always safe to do so but not really necessary.  I did anyway.  On line 1b I wrote "Article 18 paragraph 5".  On line 5, I wrote:

"I am a US citizen resident in the UK and working for a UK employer.  I contribute to a
scheme  provided by my employer that receives UK tax relief. The UK/US tax treaty,
Article 18, par.5 section (ii) states that contributions made to the pension scheme by my
employer shall not be treated as part of my taxable income in computing my taxable
income in the United States.  Hence, I am not including my employers pension contribution (14% of gross salary) in my gross taxable income.

Although section (i) of paragraph 5 also allows me to exclude my pension contributions (6% of gross salary), I choose to include them in my gross taxable earnings (line 7 1040) in order to establish as cost-basis in my pension when it is eventually distributed."

I asked the IRS guy if one could also include employer's contributions to the pension scheme in gross wages in order to increase the  cost-basis upon distribution and he burst out laughing.  Oh well.. 

Again, all of this is for UK pension schemes that are essentially equivalent to a qualified pension scheme (defined benefit) in the US  (e.g., the USS scheme for academics).  I would imagine that a money purchase scheme (defined contribution) is a different story (perhaps that is what guya was thinking about..).  That kind of pension has an account with your name on it and with an actual amount of real (not promised) money in it.

I'm concerned that the original poster (grupt) was stressed out for no reason and that he found himself having to come up with various tax deductions (mortgage interest etc.) to offset a US tax liability resulting from unnecessarily including employer pension contributions in his total income..

Although section (i) of paragraph 5 also allows me to exclude my pension contributions (6% of gross salary), I choose to include them in my gross taxable earnings (line 7 1040) in order to establish as cost-basis in my pension when it is eventually distributed."

I asked the IRS guy if one could also include employer's contributions to the pension scheme in gross wages in order to increase the  cost-basis upon distribution and he burst out laughing.  Oh well.. 

We do not know your level of earnings so it worth saying that Articlr 18(5) does have financial limitations which you may or may not have exceeded.

I do not know if the "IRS guy" is familiar with the interaction between IRS Code Sections 402(b) and IRS Code section 72; perhaps you would like to enquire what is humerous about those parts of the IRS Code?

We do not know your level of earnings so it worth saying that Articlr 18(5) does have financial limitations which you may or may not have exceeded.

guya, is there a simple way of stating what those financial limitations are?  I realize there might not be a single figure...  FWIW: I am married, two kids, and earning approx. £50,000, including CB/CTC but not including the 14% employer contribution.  As gldms speculates - I am in USS. 

Taking the mortgage interest deduction is not a problem - it does work to reduce tax liability to zero, after first adding employer USS contribution.  But if I haven't made an error in my previous returns, it would save me some work in amending them.  (I didn't exactly rush to do it...)

thanks...