Should I file tax - I've never lived in the US and I have no assets in the US

It's not always acquired v. natal though.  I would never  voluntarily give up my acquired UK citizenship.  Renouncing my natal US citizenship didn't cause me any pangs, quite the opposite.

It would be interesting if you could donate extra citizenships (like organs) to people that need them. Selling them would also have the same issues as selling organs, but what if there was a vetted system for matching people that want/need US citizenship with those that want to get rid of it......it's a win, win situation

A family auction... swap you four US citzenships for two Irish...

I would LOVE it if the US went to a UK type tax (without it being as high of course ). I would much rather just get taxed on my income.....and it's GONE.....never to be seen again. No deductions.....no way to get around it.....you pay it before you even see it. But......people in power wouldn't like that.......

Be careful what you wish for - what if that simplification means no FEIE or FTC (which would truly be a nightmare for expats)?

Be careful what you wish for - what if that simplification means no FEIE or FTC (which would truly be a nightmare for expats)?

They're bound by the treaty to give tax credits - Article 24.

The US will never give up FTC, treaties or not. Too many powerful people have foreign assets that are taxed abroad. In his first years as President, even Obama filed a 1116 - book sales abroad.

But it's so nice to know that even if they wanted to, they couldn't. 

Whoa, ... don't be too sure about that. At this point in time, the US can do pretty much as it pleases, .... for now.

Look for Allison Christian's comments on the treaty override aspects of FATCA.

And.....I am still planning/hoping for several rules to go in MY way.
1. My UK wife is supposedly eligible for spousal social security. So even if we both take our SS at 62 that would give her a good £300 a month of extra money.
2. My SS only taxed in the UK.
3. My US Govt pension only taxed in the US.
4. Eventual foreign tax credits that I can use on my US taxes. Although I don't think I will go a long way over the UK taxable threshold.

I'll use the rules to my advantage if they are there.......and if I am not too ignorant to know how to use them.....

Whoa, ... don't be too sure about that. At this point in time, the US can do pretty much as it pleases, .... for now.

Personally I think it's a mistake to think the US can do as it pleases.  It does have to co-operate with other economies on the basics that keep capital moving.  Of which FTC is one.

Look for Allison Christian's comments on the treaty override aspects of FATCA.

. Yes I read it.  That one I agree is a problem for the US to solve.

3. My US Govt pension only taxed in the US.

Careful there. If you are a UK resident HMRC will probably want to tax your US Government pension. Take a look at theses links

http://intltax.typepad.com/894_pension_taxation_uk.pdf

http://talk.uk-yankee.com/index.php?topic=86941.0

Careful there. If you are a UK resident HMRC will probably want to tax your US Government pension. Take a look at theses links

http://intltax.typepad.com/894_pension_taxation_uk.pdf

http://talk.uk-yankee.com/index.php?topic=86941.0

Yeah, I was following that post about the guy getting his pension taxed. I could at least see the UK not allowing the pension....wasn't it a California pension?

I re-read that flow chart several times.....still not sure it makes any sense to me. My pension is literally a US Govt pension. I worked as a school teacher for the Dept of Defense. I thought that flow chart left a lot of room for interpretation......I just re-read it again.....seems like I fit as a "no tax UK". Someone else just posted on the California post about US military pensions being ok......not sure how mine compares.

Damn just read it again.....I've no clue. ...........

Yeah, I was following that post about the guy getting his pension taxed. I could at least see the UK not allowing the pension....wasn't it a California pension?

I re-read that flow chart several times.....still not sure it makes any sense to me. My pension is literally a US Govt pension. I worked as a school teacher for the Dept of Defense.

Seems to me (going by what the treaty and technical explanation seem to me to say) that the UK would probably agree that yours is a US Government pension and therefore exempt from UK tax.

(a) any pension paid by, or out of funds created by, {the US}...to an individual in respect of services rendered to {the US}... shall, subject to the provisions of sub-paragraph b) of this paragraph, be taxable only in {the US}...;
(b) such pension, however, shall be taxable only in {the UK} ... if the individual is a resident of, and a national of, {the UK}.

You're a resident but not a national (as yet).

Technical Explanation:

Paragraph 2 deals with the taxation of pensions paid by, or out of funds created by, one of the States, or a political subdivision or a local authority thereof, to an individual in respect of services rendered to that State or subdivision or authority. Subparagraph (a) provides that such pensions are taxable only in that State. Subparagraph (b) provides an exception under which such pensions are taxable only in the other State if the individual is a resident of, and a national of, that other State.
Pensions paid to retired civilian and military employees of a Government of either State are intended to be covered under paragraph 2. When benefits paid by a State in respect of services rendered to that State or a subdivision or authority are in the form of social security benefits, however, those payments are covered by paragraph 2 of Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support). The result will differ depending upon whether Article 17 or 19 applies, since social security benefits are generally taxable exclusively by the residence country while government pensions are generally taxable exclusively by the source country. The result will be the same only when the payment is made to a resident and national of the other Contracting State {i.e., in this case, the UK}. In such a case, government pensions, like social security payments, are taxable only in the residence country.

Tax credits shouldn't come into it, since a government pension is to be taxed only in the source country or only in the residence country.  If you become a UK national, your government pension should be taxable only in the UK (by my reading).

I would suggest giving HMRC a ring and asking how it will be treated.  Horse's mouth etc.

Seems to me (going by what the treaty and technical explanation seem to me to say) that the UK would probably agree that yours is a US Government pension and therefore exempt from UK tax.  I would suggest giving them a ring and asking how it will be treated.

That might well be the case. If we start out from the assumption that it is a US Government pension and Article 19 applies the tax treatment comes down to citizenship and residency status.

If the OP is a US citizen then the pension is US taxable.

If the OP is not a UK citizen, but is a UK resident then by Article 19 the pension is not UK taxable. But in Article 1.5b it says that Article 19 does not apply "upon individuals who
are neither citizens of, nor have been admitted for permanent residence in, that State." So the OP is not a UK citizen, but if they are a UK permanent resident (whatever that means) then Article 1.5b makes Article 19 moot and the UK can tax the US Government pension. I have no idea how HMRC assesses residency in this situation or whether it even bothers to apply the saving clause.

If you become a UK national, your government pension should be taxable only in the UK (by my reading).

Don't forget that if the OP remains a US citizen US tax will still be due.....so as a US/UK dual citizen resident in the UK a US Government pension is taxable in both the US and the UK.

That might well be the case. If we start out from the assumption that it is a US Government pension and Article 19 applies the tax treatment comes down to citizenship and residency status.

If the OP is a US citizen then the pension is US taxable.

I agree it's currently US taxable, but it seems to me that's because government pensions are generally taxable only in the source country.

If the OP is not a UK citizen, but is a UK resident then by Article 19 the pension is not UK taxable. But in Article 1.5b it says that Article 19 does not apply "upon individuals who
are neither citizens of, nor have been admitted for permanent residence in, that State." So the OP is not a UK citizen, but if they are a UK permanent resident (whatever that means) then Article 1.5b makes Article 19 moot and the UK can tax the US Government pension.

I agree.

I have no idea how HMRC assesses residency in this situation or whether it even bothers to apply the saving clause.

I've puzzled over that.  I think (hypothesize) they probably do, where primary taxing right depends on residence.