Hello
Guest

Sponsored Links


Topic: Pension contribution limits  (Read 1092 times)

0 Members and 1 Guest are viewing this topic.

  • *
  • Posts: 7

  • Liked: 0
  • Joined: Jan 2015
Pension contribution limits
« on: June 01, 2016, 03:45:29 PM »
Hi,
I have a question about maximum pension contributions to a UK pension and reporting contributions on US tax returns.
Buzzacott's link: http://www.buzzacott.co.uk/getattachment/c1e92ddc-d348-4c33-82c9-b56682bad017/how-us-citizens-can-make-the-most-of-uk-pensions-c [nofollow]
I'd followed the same approach mentioned in that link and contributed as much as I could to start making up for years of jobs without decent pensions (my current employer contributes 1%).  Buzzacott's link does say 'You will not usually be able to claim full tax relief for your UK pension contributions on your US return but it does not usually impact the US liability.'

Looking through the other posts here, I can see the conversations on using (explicit or implied) of the tax treaty to exclude pension contributions or using FTCs to cover liability.

So, is there an upper limit on how much can be excluded? If there is, is there some other way you can limit the US liability as implied in that link?  In other words, if there's a limit of $25k and someone had contributed $40k (well within the numbers in the link above, but not what I did!) then they would have to show $15k as income (not pension excluded), but from the UK perspective, no tax on that was paid.  FTCs aren't likely to cover the extra $15k, right?  Am I missing something?


  • *
  • Posts: 1912

  • Liked: 58
  • Joined: Apr 2008
Re: Pension contribution limits
« Reply #1 on: June 02, 2016, 01:13:54 PM »
If you exclude the contributions from US taxation by using the treaty you can only exclude up to the IRS limits.

If you use FTCs or FEIE you are not limited by the usual US contribution limits.


  • *
  • Posts: 7

  • Liked: 0
  • Joined: Jan 2015
Re: Pension contribution limits
« Reply #2 on: June 02, 2016, 09:35:58 PM »
Many thanks for clarifying.
I tried various numbers in the online tax system I've been using and looks like I could cover a small to medium one off payment (either through treaty exclusion or FTC/FEIE), but definitely couldn't cover the quantities discussed in that link! Lesson learned about checking both tax systems before doing anything to a pension.


Sponsored Links





 

coloured_drab