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A Nonresident Alien just took steps towards becoming a a…

A Nonresident Alien just took...
A Nonresident Alien just took steps towards becoming a a U.S. Permanent Alien in June 2017. He is an airline pilot with a tax home in Hong Kong. He has a Mandatory Provident Fund established with the employer. The “MPF” (or Mandatory Provident Fund) is a Hong Kong Government legislated ‘Scheme’ that ensures each working citizen has a pension. It is mandatory for all Hong Kong working citizens, and Employers have to contribute payments towards the pension much like the USA (Employees usually make contributions but are not required to). Various investment companies run MPF Schemes and are approved by the HK Government.The NRA, is concerned with taxation in the U.S. when he begins distributing form the MPF Fund. Publication 575 states:Foreign Contributions while a Nonresident Alien
Your contributions and your employer's contributions are not part of your Cost if the contribution was based on compensation for services performed outside the United States while you were a nonresident alien and not subject to income tax under the laws of the United States or any foreign country (but only if the contribution would have been taxable if paid as cash compensation when the services were performed)Although, there is clear guidance on this issue the question is: Is this as simple as it get, since no tax treaty in place with Hong Kong, and Publication 575 defines the situation? A determination letter or private ruling are not necessary in this case, correct?Thank You.
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Answered in 1 hour by:
7/31/2017
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Private letter rulings are requested when there is no clear guidance on the tax issue. A foreign pension especially one from a country where there is no tax treaty is clear cut.

The cost of the ruling would also be required and no change in the tax treatment of a pension where there is no cost to count to reduce the taxable portion.

The private ruling is not necessary.

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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,863
Experience: 15years with H & R Block. Divisional leader, Instructor
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Customer reply replied 9 months ago
Robin Thank you for your response. So, you do agree that Publication 575 is the correct guidance for this matter correct? Do you have a specific IRC Section that may serve as support? Many thanks!
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