Thanks @AmyC for taking the time to respond. I'm a cash basis filer, and I had previously reviewed the docs you referenced and concluded, like you, that the Jan 2 deposit should be reported as 2025 income.
I was hoping there might be some kind of exception in the context of foreign income, partly because a cash basis filer is allowed to elect the accrual method for foreign tax credits. (It's a check box on Form 1116, based on section 905 of the tax code, that says foreign tax credits may "at the option of the taxpayer and irrespective of the method of accounting employed in keeping his books, be taken in the year in which the taxes of the foreign country or the possession of the United States accrued".) I thought perhaps if I made that election on Form 1116 that it might also mean that I could report the matching foreign income on Form 1116 on an accrual basis. But since my prior post I did a deep dive on that issue and concluded that it is only the foreign tax, and not the foreign income, for which I could elect accrual.
For 2024, electing to report the foreign tax on an accrual basis, while reporting the income on a cash basis, would increase my foreign tax credit by several hundred dollars (because I would be reporting 11 months of pension income, but 12 months of foreign tax accrual). It's tempting to do that, although I'm reluctant partly because once I make that election I'm locked in to doing it in all future tax years, and partly because the savings in 2024 will eventually be offset when the timing difference of 2024 is resolved. So the only true savings will be the time-value-of-money until that happens.
So I've accepted that I need to report 11 months of pension income in 2024, but I'm still undecided about which choice I'll make regarding the accrual of the taxes.
