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Posted Wed, 08 Jan 2025 09:36:59 GMT by Tcm
Hi, my husband (UK citizen and resident) has taken a small lump.sum from his old 401K amd was charged 30% withholding tax. Even with this lump sum income he's within the 20% bracket here in UK so we want to reclaim the full amount of the US withholding tax paid so we can pay the 20% here in UK (ie we don't want to just do the offset thing as then we'd lose the 10%) Can anyone advise what treaty sections he has to include in the US 1040NR tax return in order to claim the full amount back so he can just pay the 20% here?
Posted Thu, 23 Jan 2025 09:33:52 GMT by HMRC Admin 25 Response
Hi Tcm,
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 does 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.
Thank you. 
 

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