This is sort of complicated so please bear with me. I am a dual national- British by birth and a nationalised american. I live in the UK on a survivors penson(widows ) from the USA social security which is sent to my american bank in texas and i acess it by a debit card.
as a dual national I have to file taxes yearly in both countries.In the USA ,being as my world wide income is under $20,000 , my penson is tax exempt so i dont pay any taxes to the IRS. . However i pay tax on it in the UK- dispite the UK/USA tax treaty that says any income arising in one country that isnt taxable in that county is not taxable in the other.The UK accepts that if its not taxable in the USA then yes its exempt in the UK but!- and its this 'but' is that is costing me a large chunk of my income in tax!!
The uk tax department tells me, as some Americans pay tax on their social security income(those earing over this amount) that makes it not country wide that social security is tax exempt income! As its just that i dont pay it due to low income and as the UK doesnt have that 'benifit ' then its taxable .
Does anyone understand this reasoning because I dont? To me its simply that if i lived in the USA i wouldnt pay tax on my survivors pension but because i live in the uK i do!. And its also very unfair as this 'rich american' wouldnt be paying tax on all of their social seurity ! just the amount that pushes them over $25,000! and i pay on the whole lot !
as a dual national I have to file taxes yearly in both countries.In the USA ,being as my world wide income is under $20,000 , my penson is tax exempt so i dont pay any taxes to the IRS. . However i pay tax on it in the UK- dispite the UK/USA tax treaty that says any income arising in one country that isnt taxable in that county is not taxable in the other.The UK accepts that if its not taxable in the USA then yes its exempt in the UK but!- and its this 'but' is that is costing me a large chunk of my income in tax!!
The uk tax department tells me, as some Americans pay tax on their social security income(those earing over this amount) that makes it not country wide that social security is tax exempt income! As its just that i dont pay it due to low income and as the UK doesnt have that 'benifit ' then its taxable .
Does anyone understand this reasoning because I dont? To me its simply that if i lived in the USA i wouldnt pay tax on my survivors pension but because i live in the uK i do!. And its also very unfair as this 'rich american' wouldnt be paying tax on all of their social seurity ! just the amount that pushes them over $25,000! and i pay on the whole lot !