Is a foreign employer's pension fund contribution taxable?

Forum|Forum|6 years ago
December 7, 2019
3 replies
0 views

I have a client who lived abroad and besides his base salary, got a pension fund contribution as well as housing allowance, and trying to determine what he can exclude.

Lacerte Tax

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Best answer by George4Tacks

I have always seen the employer pension listed as part of the compensation and I have included it. I think our foreign expert is tied up with some turmoil in his home town.

George4Tacks

Level 15

@itonewbie can probably confirm my "guess" that the answer is YES.

Answers are easy. Questions are hard!

George4TacksAnswer

Level 15

I have always seen the employer pension listed as part of the compensation and I have included it. I think our foreign expert is tied up with some turmoil in his home town.

Answers are easy. Questions are hard!

itonewbie

Level 15

Thanks for flagging me on this. Was hoping things would start to settle down but...

---------------------------------------------------------------------------------Still an AllStar

itonewbie

Level 15

As George says, foreign pension and housing allowance (as with other benefits-in-kind) are taxable. The golden rule that all income is taxable except specifically exempted still applies. Housing allowances spent on qualified housing expenses, on the other hand, may be excluded under §911. In addition, statutory pension contributions often are not characterized as compensation.

Under some tax treaties, however, certain types of pension contributions may be tax deferred but could still be subject to limits that others apply to qualified US plans. You will need to refer to the relevant clause(s) in the treaty of the country in which your client is a tax resident for the details.

Depending on the type of investments within the pension plan, your client may also have exposure to PFIC and other information return filing requirements (including FBAR and FATCA).

---------------------------------------------------------------------------------Still an AllStar

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