It depends. If you are a U.S. Citizen, in general you are taxed on all of your worldwide income on your U.S. tax return, and that would include your pension from Colombia. There are, however, exceptions and provisions to limit or eliminate U.S. taxation on the income. Here are a few of those:
-
Tax treaty. If a tax treaty exists between Colombia and the United States on this income, it is possible that the income is exempt. (You would have to do research to see if a treaty exists that excludes this income).
-
Foreign income exclusion. If you were living outside of the United States for a period of 330 out of 365 days within a 12 month period, you are allowed to exclude Foreign income received during that time frame (up to the yearly exclusion limit) from your U.S. return. The exclusion is available on Form 2555, which you can access by typing "2555" into the Search box and then clicking on the Jump to Form 2555 link.
-
Foreign tax credit. Even if you do not qualify for the income exclusion, if Colombia taxes your pension, then you may receive a credit on your US tax return for taxes paid to Colombia on the pension. This credit can be claimed on Form 1116. Similar to Form 2555, you can access this in TurboTax by typing "1116" into the Search box, and then clicking the Jump to Form 1116 link.
Otherwise, the U.S does require you to include this income on your return, but if you qualify for one of these three treatments, you may be able to reduce and even eliminate U.S. tax on this income.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
