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emc011075
emc011075, Tax adviser
Category: Tax
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Experience:  IRS licensed Enrolled Agent and tax instructor
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How is a Swedish Citizen who is in the US on a visa and taxed

Customer Question

How is a Swedish Citizen who is in the US on a visa and taxed as resident alien taxed on Swedish pension assets. No distributions were made. I have read appreciation in account is taxable to US
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you.
Assets that are appreciating inside a retirement account are not subject to income tax until distributed to you.
Generally foreign pension is subject to income tax just like US pension unless specifically defined in tax treaty. According to US-Sweden tax treaty:
"Notwithstanding the provisions of paragraph 2 of Article 20, pensions (including the Swedish
“allmän tilläggspension") and other benefits paid out under provisions of the social security or similar
legislation of a Contracting State to a resident of the other Contracting State or a citizen of the United
States shall be taxable only in the first-mentioned State."
http://www.irs.gov/pub/irs-trty/sweden.pdf (Article 19)
Meaning, if your Swedish pension is taxed in Sweden, it is not taxed in US.
Let me know if you have any questions.
Expert:  emc011075 replied 1 year ago.
I see you read my respond. Any questions? I was thinking about what did you mean with "appreciation in account is taxable to US". It was never the case. Appreciation in a retirement account is considered UNEARNED income until it distributed. Than it become EARNED income and will have to be reported. Unearned income is not reportable because it is not guaranteed.
One of the other expert pointed out, maybe you read something about FBAR reporting (you report value of your foreign account, regardless of the source of the money or how much it appreciated or lost in value). However, since you are not Permanent resident (green card holder) or US citizen, this doesn't apply to you. Resident alien for tax purposes is NOT the same as Permanent resident for FBAR reporting.
Let me know if there's anything else I can help you with today. And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

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