US/UK taxation of social security - REDUX

I wonder if the value of free bus passes is US taxable?

A bus pass has an individual account number, if you have one (they're not obligatory).

A bus pass has an individual account number, if you have one (they're not obligatory).

Not obligatory, but very useful. My mum has one. I'm a lot of years away from qualifying for one, but as a bit of fun I once planned a trip from the North East of England down to London using just local buses (free with the pass) and a folding bike. It took a few days, but would be fun. The value of the pass must be quite a bit........and it has an account number.......so are they taxable, FBAR or FATCA? I'm being ridiculous......aren't I?

You're feeling no more ridiculous than I did when I gave it some thought and research.

I suspect you're beginning to understand why I'm so annoyed with this whole US tax *#/t!

I suspect you're beginning to understand why I'm so annoyed with this whole US tax *#/t!

The system is focused on companies and high net worth individuals and the Congress/IRS has little concept of the impact of the laws on US citizens living a regular life abroad.

You've sparked some interesting conversations (and considerations) in the topics of the last few months, but the sad news is we've only scratched the surface on the many other topics we could discuss which effect the 'regular life abroad' and completing a 1040. Some would effect others judging from comments in some threads/posts.

Most of my concerns obviously involve my retirement accounts and funding my retirement in the UK. I haven't lived in the UK as a US citizen so I'd be interested to see a list of some other issues that come to your mind.

For starters from my past restricted perspective:

The global environment. USCs may not only have to worry about US/UK relationships if they've lived or worked elsewhere, but those of 3rd or 4th countries. Multiple tax treaties and 'source' of income become factors.

HTKO was mentioned in passing on one thread. It's become a hot topic for 2011. In prior years, handwriting on Form 1116 was involved, but this year it even has its own new, dedicated line for part of the declarations.

Tax code definitions, and the way the IRS accept filing differently from what seems logical by use of the code definition.

From recent posts I've noticed, these will effect some on UKY. From what I've read, only one of the above will be of concern to you.
   

I'm a Us citizen, UK resident, receive US social security and a UK state pension. I tried to figure all this out myself also but gave up and got a tax professional.  If you opt to take the treaty position, you have to file form 8833 "treaty-based return Position Disclosure'. On my 2010 US tax return, on that form,  here's what he wrote: "Social Security Pensions: the taxpayer is resident in the UK and taxed on a worldwide basis. Article 17 provides that the country of residence … is given the sole right of taxation. This provision is not subject to the saving clause in article 1. Therefore the US SS pension of $xxx and the UK SS pension of $... are taxed in the UK and not in the US."

To follow up on this and correct my previous post so that I am not putting out not misinformation  -
My accountant now says that he agrees that you do not take a treaty position for the UK state pension. It should be treated as pension income on the 1040 (in my case it makes no difference for my return).

To follow up on this and correct my previous post so that I am not putting out not misinformation  -
My accountant now says that he agrees that you do not take a treaty position for the UK state pension. It should be treated as pension income on the 1040 (in my case it makes no difference for my return).

Your accountant sounds like a good professional