Foreign Pension

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  • Questionguy101
    Senior Member
    • Jan 2007
    • 423

    #1

    Foreign Pension

    Taxpayer retired, immigrated to the US and became a permanent resident in 2008.

    In 2009, he received a lump sum distribution of his pension from his former employer in the foreign country where he was originally from. The total amount is $50,000. Of which $20,000 is his own after-tax contribution when he was working in the foreign country before he immigrated to the US.

    I am sure the $30,000 contribution by his former employer is taxable in US here. But what about his own $20,000 contribution? This is after-tax contribution but the tax has been paid to the foreign government, not to the US government. Does the IRS still consider it 'after-tax'?
  • appelman
    Senior Member
    • Jan 2010
    • 1195

    #2
    Foreign pension

    I think I would treat it as after-tax. Has there been any withholding by the issuing country? You might also want to check the tax treaty between the countries.
    Evan Appelman, EA

    Comment

    • outwest
      Senior Member
      • Dec 2005
      • 455

      #3
      Pull the tax treaty..

      Canadian government pensions are treated as SS benefits on US tax returns for instance.

      Also check for a pub on the issue, that's where I found out about the Canadian pensions.

      Comment

      • Questionguy101
        Senior Member
        • Jan 2007
        • 423

        #4
        Originally posted by outwest
        Canadian government pensions are treated as SS benefits on US tax returns for instance.

        Also check for a pub on the issue, that's where I found out about the Canadian pensions.
        My client is from Hong Kong. Does anyone know where I can find the tax treaty with Hong Kong?

        Comment

        • S T
          Senior Member
          • Jun 2005
          • 5053

          #5
          Tax Treaty

          Try IRS Pub 901 and then I also I just "googled" US Tax Treaty and Hong Kong

          It doesn't appear that there is a Tax Treaty between US and Hong Kong, but I didn't search very far or read all of the links. http://www.foxbusiness.com/story/mar...ents-expected/

          Might want to try the "google" search and see what you find

          Please post back for future reference on your findings.

          Sandy

          Comment

          • Questionguy101
            Senior Member
            • Jan 2007
            • 423

            #6
            Originally posted by S T
            Try IRS Pub 901 and then I also I just "googled" US Tax Treaty and Hong Kong

            It doesn't appear that there is a Tax Treaty between US and Hong Kong, but I didn't search very far or read all of the links. http://www.foxbusiness.com/story/mar...ents-expected/

            Might want to try the "google" search and see what you find

            Please post back for future reference on your findings.

            Sandy
            So if there is no tax treaty, Should I assume that we should apply the US tax law to determine the taxability of the pension distribution?

            Comment

            • Kram BergGold
              Senior Member
              • Jun 2006
              • 2112

              #7
              Worldwide income

              He is taxed on worldwide income. The only question is whether to tax the post tax contributions. My first thought was I would not include post tax but after thinking about it since the US did not tax the pension previously I would tax it but then I would claim a foreign tax credit using the accrual option.

              Comment

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