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Hi @pk ,

 

Thank you so much for your detailed response and for taking the time to revisit the treaty provisions!

 

Regarding the nature of the payment, I wanted to clarify that it came from a Swiss second-pillar pension fund, funded by both employer and employee contributions, with the employer being a government agency. Based on that, I believe it falls under Article 19(2) , rather than Article 19(4) ?

 

You're absolutely right that the timing of my entry into the US makes this a tricky case. That said, I wonder whether there is any room to argue in good faith that the treaty protection under Article 19(2)(a) still applies, given that Article 1(3)(b) exempts individuals who are neither US citizens nor have immigrant status from the saving clause, and I had not yet acquired immigrant status at the time the payment was received.

I understand that the residency start date is retroactive for tax purposes, but the treaty language seems to distinguish based on immigration status, not just tax residency. Could that open the door to a narrower interpretation where the exemption still applies, simply because immigrant status was only acquired after the income was received?

 

If the treaty protection still doesn't apply, which I now fear,  I do have a follow-up question:  You mentioned subtracting my own contributions over the years. Just to confirm, does that mean only the employer contributions and gains in the fund would be taxable as US income? That would significantly reduce the tax burden, since I personally contributed roughly half of the total amount.

 

Thanks again for your insight and generous help, it’s very much appreciated!

 

Kind regards,


fbelle