Hi britgeezer,
My situation is very similar to yours;
- Full time US residents / citizens receiving SS for both partners. I am dual US/UK citizen, my wife is US citizen.
- UK government paid to both partners based on working contributions (mine) prior to moving to the US.
- Previous UK employer pension paid to 1 person
- US tax Basis, married filing jointly.
- UK basis no tax deducted from any pension (income less than 12,500 pounds).
- UK pension amounts declared to SS.
For me the following seems to give no way out of paying taxes on UK pension;
IRS Publication 901, page 33, states that "Pensions paid by, or funds created by, the United Kingdom...........are exempt from US income tax unless the recipient is both a resident and a citizen of the United States".
Article 17 of the UK - USA Tax Treaty, section 3, seems to be relevant,
"3. Notwithstanding the provisions of paragraph 1 of this article, payments made by a Contracting State (in this case, say UK) under the provisions of the social security or similar legislation of that State (UK) to a resident of the other Contracting State (USA) shall be taxable only in that other State (USA).
As a resident and dual UK/US citizen I cannot find a way to escape taxation on my UK pensions.
When we filed for SS, 2 years ago, I discussed the issue of reducing SS payments by the UK pension (disclosing to them how much my UK pension was) and was told that was not an issue for me. I cannot remember the precise details but it may have been that I did not need to count UK credits to qualify for U.S retirement benefits.
