PENSION FROM FOREIGH COUNTRY

[Naila Ahmad]

1-My client is US resident, he was in Canada for couple of years before he came to USA and now he gets some income from his pension plan as a non-resident of Canada. How and where this income has to be reported on his 1040. 2- My other clint is green card holder but he is a resident of England. Now he is settled in USA and receives pension income from England, taxes are withheld from this income . Do i have to report this income and where? Any help will be appreciated.

[Kea]

2- My other clint is green card holder but he is a resident of England. Now he is settled in USA and receives pension income from England, taxes are withheld from this income . Do i have to report this income and where? Any help will be appreciated.

I know a little bit more about the 2nd question. Since client has a green card, it doesn't matter if he lives in the US or not. His return is treated the same as for US citizens. All worldwide income is taxed by the US. So, in general, the pension income would be reported exactly the same as if it were a pension from a US company. He may be eligible for a credit for the taxes he paid to another country on Form 1116. The client will not be eligible for the foreign earned income credit for his pension (it's not considered "earned"). Which country did the withholding - US or England? However, you will need to check for tax treaties between the US and England to find out how to deal with this specific case.

Hope that helps some.

[MargaretMort]

For your first client, it depends on how the retirement income is reported. If it is a Canadian T5, that is "old age pension" and goes on L. 20. If it is another type, I would think it is reported on L. 16. Been a few years since I have had one of those and I don't recall the number. Don't forget to change the income to American if it is reported in Canadian amounts though this year the exchange rate has been pretty close to par on average.