Thank you for clarifying. I agree, it is all quite absurd.No additional tax complications; or at least, none of which I'm aware. Just the overall inconvenience and possible extra expense of having to go a very long way around what should really be very straightforward.
Happily, it seems as though my company's accounting firm agrees with you for now, as they have not filed a 3520 for me so far. I will continue putting no more than the employer match into my pension to avoid poking the bear.Personally, I'm of the opinion that a UK pension of any type and composition is straightforwardly covered by treaty. But that's just me. There are multiple interpretations, and perhaps even a choice to be made in places.
Unfortunately I'm starting to fear that you may be right, and that it may be the most (only?) reasonable option for US emigrants. I will try to play the game for now, but if I change companies and have to start paying thousands for someone to do my taxes every year on top of all of the other costs and inconveniences it may be time to renounce.Indeed. Hang around this stuff long enough and it starts to consume more and more of your precious life, often to the point of resentment. At which stage, renunciation becomes an attractive prospect.
Yes, this is something that is on my mind.One added warning. Since you mentioned at least the possibility of renouncing, watch out for the US's appalling 'exit tax'. Especially if/when you think you might reach the magic $2mm trigger for it (you might think it remote, but you could be one rich uncle's death away!). This has the potential to simply put renunciation out of reach. Suppose you have a chunky SIPP or pension, and on renunciation the US demands 35% of its balance as if withdrawn on the day you renounce. You might not have the ready cash to pay this, yet there is no way to take money out of a UK pension before age 55 (rising to 57 shortly). Renunciation is a human right, but the 'land of the free' has tax rules that can render it un-exercisable. Something to ponder there, then.
The general sense I get from Bogleheads and other forums where US emigrants discuss these issues is that most typically end up going down the route of renunciation eventually. If that is the case and renunciation is in my future, then I'm not sure that it makes sense for me to pay such a large cost to maintain my US citizenship in the intervening years just to give it up in the end anyway. Despite that, it is daunting to close the door for good, even if it makes complete sense on paper.
FelicitationsSorry, don't know what a typical US expat does in detail. Happily, I am not one.
Statistics: Posted by quicksong — Sun Jun 23, 2024 5:08 am — Replies 4 — Views 602