Taxing of IRA withdrawals if live outside of the United States

Submitted by George Eding on Mon, 2024-10-07 09:27

So I live in the United Kindom but I am still a US citizen.  There is a tax treaty between the two countries which means I pay taxes in the UK, including my Social Security earnings.  What I am not sure about is IRA withdrawals.  Which country do I pay taxes to for IRA withdrawals?   And if all my tax liability is in the UK, do I still need to file a tax return in the US?  Thanks for any clarity anyone can provide.  Sincerely,  George Eding



Submitted by Alan - IRA critic on Mon, 2024-10-07 11:01

You will have to report the distribution (and 30% US withholding is required) in both countries, but the UK only taxes the portion of the distribution that is gains in the IRA. But to prevent double taxation, you will probably qualify for a US foreign tax credit. There are also other variables, and you will probably need to use a UK tax preparer familiar with the UK-US tax treaty.

Submitted by B_Parker73 on Thu, 2024-10-10 18:17

@Alan – IRA Critic’s advice is spot on.

Re:   “And if all my tax liability is in the UK, do I still need to file a tax return in the US?”

Yes, you still need to file a US tax return.   The US taxes it’s citizens on ALL worldwide income.  To @Alan – IRA Critic‘s point, the US-UK tax treaty is intended to obviate double taxation, by providing a US citizen with a tax credit for foreign (UK) taxes paid on the same income.

repeating @Alan – IRA Critic’s advice:  See a tax professional conversant with US-UK taxation.

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