Foreign Pension

[Questionguy101]

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]

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.

[outwest]

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.

[Questionguy101]

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?

[S T]

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

[Questionguy101]

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?

[Kram BergGold]

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.