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Posted Thu, 12 Dec 2024 08:04:22 GMT by Hilda Ogden
I am a US citizen who has lived in the UK for over 30 years. I have been tax resident in the UK for all of that time. My parents - both US citizens who were always resident in the US - have died and I have now begun taking annual distributions from some inherited IRAs. US Federal tax has been deducted from the IRA distributions.I file both UK and US tax returns. My understanding from other forum posts is that (a) the distributions are taxed as interest in the UK and shown as interest on the SA106 (Foreign) pages of my UK tax return, (b) because I am a US citizen resident in the UK, both the UK and US can tax the distributions, (c) the UK will not give credit for federal tax paid in the US and therefore (d) the US is required under the UK/US Tax Treaty to give credit for UK tax paid on the distributions. Can you please confirm that I have understood this correctly?
Posted Wed, 18 Dec 2024 15:33:03 GMT by HMRC Admin 18 Response
Hi,
We are unable to review personal matters in this forum.  For an answer to a personal question of this nature, you would need to contact our self assesment helpline on telephone number shown on the link here:
Self Assessment: general enquiries
or contact our webchat facility at:
Contact HMRC
Thank you.
Posted Wed, 18 Dec 2024 16:39:12 GMT by Hilda Ogden

RE: Tax on US 401K distributions

Posted Sat, 11 Jan 2025 20:54:56 GMT by Susie N.
I am a UK citizen living in UK. Beacuse my 401k has poor choice of investments and no facility to take periodic withdrawals, I am looking to roll it over into an IRA. I understand that this will keep the funds behind a pension wall, My question is would the HMRC tax withdrawals from the 401k differently from withdrawals from the IRA? Many thanks.
Posted Tue, 28 Jan 2025 14:45:53 GMT by HMRC Admin 8 Response
Hi,
Payments made by the individual into an IRA, are made after tax relief is given to the individual by the employer.  
Payments from this pension are taxable in the USA.  
HMRC do not recognise IRA schemes as pensions, so for UK residents, they are taxed as income under the interest and declared as foreign interest on a tax return (SA106).    
There is no US taxation if the pension is subject and liable to UK tax. If US tax is withheld, then the individual,  should seek a refund of this tax (file a form 1040NR).  HMRC will not give a credit for this tax against any UK tax charged on this income.   
Payments made into a Roth IRA are made before tax relief is given.  As a result, payments from this account are not taxable in the USA.  HMRC recognises this account as a pension scheme and as it is not taxable in the USA, it is not taxable in the UK either.
Thank you.

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