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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2325
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Client joined FAO (an agency of the United Nations) in January

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Client joined FAO (an agency of the United Nations) in January 1983. He retired December 2000. He rolled over entire lump sum$160,000 to IRA. He receuved hisUS Green Card in April 1998 (bfore he retired). Thus a good percentage of his lump sum was BEFORE the Green Card and he feels this portion should be tax free. I do not agree.

Additional information: The UN pension fund is classified by the IRS as a Qualified Pension Fund. UN compensation during the nonresident periond was not taxed by any government because of the client's diplomatic status. During his greencard period his income was subject to US taxation.

The questions has two aspections: Can he exclude the cost of his contributions made during his nonresident period? Ref. IRC 72(w) the answer seems to be no. Confirm I am reading this right.
Can he exclude from income that portion of his pension attributable to his nonresident alien period? I believe the answer is again no but I need a citation Gambino, EA Rome It NAEA
Submitted: 4 years ago.
Category: Tax
Expert:  MequonCPA replied 4 years ago.

Dear Vincent

 

Your analysis is correct. A US resident alien (green card) is taxed on their worldwide income from whatever source unless specifically exempted. Taxpayer may be allowed a credit for taxes to another country on the same income (Foreign Tax Credit). As the amounts from the pension plan that were rolled into the IRA were never taxed by any territory, the taxpayer has no basis in the asset, thus no exclusion from US taxation. See link below.

http://www.irs.gov/businesses/article/0,,id=187083,00.html

 

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2325
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
MequonCPA and 9 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Thank you for the input. I clicked enough but I am not sure I approved payment. Let me know if the payment did not go through.

 

Vince Gambino

Expert:  MequonCPA replied 4 years ago.

Vincent -

 

Thank you for the accept. I have received the payment.

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