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Do you owe tax on foreign pensions 300 dollars a month.

Hi do you owe tax...
Hi do you owe tax on foreign pensions 300 dollars a month.
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Answered in 35 minutes by:
3/16/2018
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,624
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

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As a general rule, the pension/annuity articles of most tax treaties allow the country of residence (as determined by the residency article) to tax the pension or annuity under its domestic laws. This is true unless a treaty provision specifically amends that treatment. The answer is yes unless a tax treaty specifically says no.

In many cases, foreign social security payments are taxable by the country making the payments. Unless specified otherwise in an income tax treaty, foreign social security pensions are generally taxed as if they were foreign pensions or foreign annuities. Unless a tax treaty allows it (see, e.g., the USA-Canada treaty), they are not eligible for exclusion from taxable income the way a U.S. social security pension might be.

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Customer reply replied 1 month ago
OkAy you lost me...would a pension from Egypt be taxable here in the us

Thanks, ***** ***** check the treaty. One moment.....................................

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If resident in the US then the pension from Egypt is taxable in the US.

ARTICLE 19 Private Pensions and Annuities

(1) Except as provided in Article 21 (Governmental Functions), pensions and other similar remuneration paid to an individual in consideration of past employment shall be taxable only in the Contracting State of which he is a resident.

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Customer reply replied 1 month ago
Ok so if this person did not pay tax in the last 4 years what will happen? Can he set up a payment plan with the irs

He needs to amend the prior years and report the income. That will allow him to calculate how much tax is owed. Then he can request to pay by installment if he cannot pay when the returns are each filed.

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What will happen? If the IRS determines the income was omitted they will send a letter and add the income. They will request the payment of tax be made.

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Customer reply replied 1 month ago
I know but should we notify IRS

Yes by filing the amended returns as I advised above. That is notifying the IRS.

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Customer reply replied 1 month ago
Okay so you are 100 percent sure if a person came to the United States and never worked here his only source of income is a pension he is receiving from his country of Egypt, which amounts to 300/a month he needs to pay taxes on it?

only source of income I am positive that a foreign pension from Egypt is taxable in the US to a person that is resident in the US.

Adding only source of income makes that different. Now you look to the amount that requires a person file a return.

$3600 is not enough to require to file.

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Customer reply replied 1 month ago
Ok. So to clarify as this is his only source of income (a pension from Egypt that amounts to 300 a month) he is not required to pay tax on it? Is their a certain minimum amount that he does not need to report?

He is not required to file a tax return and would not owe tax. He owes no tax only because the amount is not enough to require he file a US return. No amendments would be required.

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Did that clarify?

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Customer reply replied 1 month ago
it does but for my own knowledge at what amount would
He be required to owe money

How old is he?

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Every year it can change a little but for 2017 it is $11950 if he is 65 or older. You did not answer so I answered for a person at usual pension age.

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Customer reply replied 1 month ago
Last question, what if the person is under 65? What is the minimum amount

$10400 for 2017 and it goes up a little every year to match the standard deduction and exemption amount.

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Customer reply replied 1 month ago
Ok so over 65 it is 11950 and under 65 is 10,400 correct?

In closing, Correct. That is specific to this tax year. every year is adjusted a little.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 17,624
Experience: 15years with H & R Block. Divisional leader, Instructor
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