US Pension and Taxes

Hi All

Can any one offer any basic advice on the following please.

If my wife was to retire from working here in the UK (No UK Pension ) and start collecting her Pension from America , do you know approximatly what taxes she would be paying on it?

At the moment she is working and paying taxes to UK, and her accountant back in America makes her returns for her so she is not paying any taxes twice, ie also to US governmant.  She lives in UK full time.

However if she decided to take retirment and call on her US Pension would she pay taxes to UK and US or similar to as if she worked in UK?

THanks in advance

Can I assume she is a US citizen since files taxes in the US as well as the UK?

I and my wife are in the same situation with foreign income from the USA plus income in the UK. (We are retired living on US and UK pensions, dividends, interest etc).

Once your wife starts receiving a US pension it is probably taxable in the UK also, unless it is a US government pension which is only taxable in the US as per the UK/US tax treaty. Private pensions are taxable in both the US and UK but if she is receiving US SS then it is only taxable in the UK. All very confusing.

Hi   

Yes she is a USA Incident,  she had 34 years of Pension from her Job whilst in America as a Teacher, Im unsure how the pension works if its a State Pension or Government, guess I should ask her :-)

At the moment she is teaching in the UK and only paying Taxes to the UK, but Im trying to persuade her to quit and take a look at retiring!... 

Hi   

Yes she is a USA Incident,  she had 34 years of Pension from her Job whilst in America as a Teacher, Im unsure how the pension works if its a State Pension or Government, guess I should ask her :-)

At the moment she is teaching in the UK and only paying Taxes to the UK, but Im trying to persuade her to quit and take a look at retiring!...

I THINK the treaty only allows federal pensions to be taxed in the USA only, but hopefully someone will come along and confirm one way or another.

As a USA Citizen  she should be filing a US tax return  every year and declaring  her UK income as the US taxes it’s citizens on their worldwide income no matter where they reside. She can exclude all her earned income up to $100k  using form 2555 so wouldn’t be paying US taxes but should, I believe, be filing a tax return.

Hi. For a USC, a government (state, local, county/parish, federal, school board, etc.) pension is taxable in the USA and not the UK. US Social Security pension payments are only taxable in the UK. Both per the US/UK tax treaty. Note section (b) for the "except when" clause.

And from the tax treaty:

(a) any pension paid by, or out of funds created by, a Contracting State
or a political subdivision or a local authority thereof to an individual in respect
of services rendered to that State or subdivision or authority shall, subject to
the provisions of sub-paragraph b) of this paragraph, be taxable only in that
State;
(b) such pension, however, shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of, that State.

Thanks all,

Yes she does fill in a tax return via her accountant each year for filing in USA, always a 0 return for her fortnatly :-)

She does tell me her pension is a State Pension earnt in California teaching.   So from what I am reading is that Tax would be paid in USA on her Pension and nothing in UK even if it was seen as income over here?

I dont think I can persuade her to retire anyway but was just trying to get some facts together to try to get her to! :-)

Thanks all,

Yes she does fill in a tax return via her accountant each year for filing in USA, always a 0 return for her fortnatly :-)

She does tell me her pension is a State Pension earnt in California teaching.   So from what I am reading is that Tax would be paid in USA on her Pension and nothing in UK even if it was seen as income over here?

I dont think I can persuade her to retire anyway but was just trying to get some facts together to try to get her to! :-)

Nothing to report on her UK return unless she has other US income aside from her government pension.

Thanks all