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Anne
Anne, Master Tax Preparer
Category: Tax
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I receive a pension from a foreign country, which has a retirement/taxation

Customer Question

I receive a pension from a foreign country, which has a retirement/taxation agreement with the US. Taxes are paid on the pension in the country from where the pension comes. Do I have to declare this income to the IRS?
Submitted: 4 years ago.
Category: Tax
Expert:  Anne replied 4 years ago.
Hi

Thank you for using justanswer. The United States has treaties with many foreign countries, some of which may allow you to exclude this income, so in order to give you an accurate answer to your question, I need a little bit more information.

Are you now considered a Resident Alien or US citizen?

What country is your pension from and are you paying tax to that country on the pension income?
Customer: replied 4 years ago.
I am a US citizen and The country from where my pension comes is Denmark and I pay taxes on it there. It was arrranged with the full knowledge of the social security system here in America when I applied for social security here.
Expert:  Anne replied 4 years ago.
Hi

That information helped, but unfortunately, there are, as you know, all type of pensions (Government, private company, etc) I'm linking you to the IRS pub on treaties.Page 29 gives some guidance on pensions. Which ones need to be reported and which ones don't.

Here's the pub:

Publication 901 (Rev. April 2010U.S. Tax Treaties

If it turns out that your pension is NOT exempt from US taxes, then there is a credit for the tax you would have had to pay to Denmark. You would claim the credit on your US tax return by filing
2009 Form 1116 Foreign Tax Credit

I hope this helps

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