Retirement tax questions

If you pay taxes on foreign income to both the IRS and foreign government, you may claim a foreign tax credit on your return. 

You are advised to select Lump-sum distribution or General Category. Please continue to read:

LUMP-SUM DISTRIBUTIONS

You can take a foreign tax credit for taxes paid or accrued on a foreign source lump-sum distribution from a pension plan. Special formulas may be used to figure a separate tax on a qualified lump-sum distribution for the year in which the distribution is received. See IRS Publication 575 for more information.

GENERAL CATEGORY INCOME

Any income that does not fit any of the above categories is general category income. The following list is not all-inclusive, but general category income may include:

- Wages, salary, and overseas allowances of an individual as an employee
- Income earned in the active conduct of a trade or business
- Gains from the sale of inventory or depreciable property used in a trade or business
- High-Taxed Income (or High Tax Kickout)

INCOME RE-SOURCED BY TREATY

Many nations have tax treaties with the United States that specify how certain items will be treated for income tax purposes. In some cases, income earned in one country will be treated as if it was earned in another country. This is called re-sourcing income. An example might be a US professor who teaches a semester in another country, but under a treaty agreement all of the wages are treated as through they were actually earned in the US, and not subject to tax in a foreign country.

To learn more about each category, please click on the blue link income category type on the screen.  See image below: