@Arneoker ,
(a) you recognize the income in the year that you received the income
(b) for US tax purposes, only US status is recognized i.e. US Person ( citizen/GreenCard/Resident for Tax Purposes ) -- taxed on world income OR Non-Resident Alien -- taxed only on US sourced income.
(c) Because there is no "in-effect" tax treaty between US and Colombia, there is no "double taxation" protection -- implying taxes paid to Colombia on Colombia sourced income is not eligible for "foreign tax credit".
(d) You could report this "pension" lump sum payment as a 1099-R equivalent, especially if she had contributed to the fund i.e. reduce the taxable income by the amount she had paid in during her period of participation.
Is there more I can do for you ?
