Contact UsI have a client with dual citizenship with the US and UK living full time in the UK.. Their sources of income are investment income from a US trust, and interest and pension income from UK. They file US and UK returns reporting all worldwide income. On the US tax return, I claim a credit for the UK taxes paid on the interest and pension income from the UK. On the UK tax return, the UK accountant claims a credit for the US taxes paid on the trust investment income. Is this correctly handled?
I am a California CPA that prepares only the US tax return. The UK tax authorities are possibly disallowing the credit on the UK return for the US taxes paid. If so, I assume we can claim a credit on the US tax return for the UK taxes paid on the trust investment income.
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Tax Professional Answers
Chuck Heyde, CPA, CGMA
You are correct in claiming credits on both returns - but I would check the US-UK income tax treaty to ensure your not taxing income that should not be taxed (i.e. article 18 for pensions).
Also, I recommend the taxpayer obtain competent UK tax advisors or at least allow you to review the UK returns to ensure the treatment is reciprocal. In other words, if the UK pension should not be taxed in the UK and if you tax it in the US and then claim foreign tax credit against the UK pension, you erroneously prepared the return.
Chuck Heyde, CPA, CGMA
www.GEMMS.us
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560 weeks ago
Also, I recommend the taxpayer obtain competent UK tax advisors or at least allow you to review the UK returns to ensure the treatment is reciprocal. In other words, if the UK pension should not be taxed in the UK and if you tax it in the US and then claim foreign tax credit against the UK pension, you erroneously prepared the return.
Chuck Heyde, CPA, CGMA
www.GEMMS.us