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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4357
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I have resided in the US for 20 years and am now a US citizen

Resolved Question:

I have resided in the US for 20 years and am now a US citizen I get a pension from South Africa and England and of course SSA. I pay a tax on my SA pension to SA do I have to pay US tax also
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

Hi,

Lane :

You may claim a tax credit or an itemized deduction for taxes paid to foreign countries. You do not need to live or to work in that foreign country in order to claim this benefit. For example, you can claim the credit or deduction if foreign taxes were paid on your behalf from a mutual fund. There are no time requirements like there are for the income exclusions. You can claim either the deduction or the tax credit, but not both, for all foreign taxes paid.

Lane :

As a US citizen you DO have to pay tax (report, in this case) on all worldwide income, but, again, the Foreign Tax Credit (FTC) and the deduction is what keeps you have having to pay tax on this yeice

Lane :

sorry "...twice."

Lane :

Here's what IRS says:

Lane :

The foreign tax credit is intended to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.


Four tests must be met for the tax to qualify for the credit:



  1. The tax must be a legal and actual foreign tax liability

  2. The tax must be imposed on you

  3. You must have paid or accrued the tax, and

  4. The tax must be an income tax (or a tax in lieu of an income tax)

Lane :

Here's an excellent article on the subject: http://taxes.about.com/od/taxhelp/a/ForeignTaxCred.htm

Lane :

and here's the IRS guidance: http://www.irs.gov/taxtopics/tc856.html

Lane :

and finallym here's the information regarding the need to report the foreign source income: http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad

Lane :

Fro the most recent link I provided: "Your worldwide income is subject to U.S. income tax, regardless of where you reside."

Lane :

Questions?

Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane :

Please let me know if you have any questions at all ...

Lane :

Let me know …


Lane

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4357
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 7 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year ago.

Hi Alan,

... just checking back in HERE, as I never saw you come into the chat.

Let me know if you have questions...

Lane

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Lane
Lane
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Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986