If you
are a US citizen or resident alien, you need to include all worldwide income on
your US tax return unless there is a specific exemption for such income.
According
to the IRS, just as with domestic pensions or annuities, the taxable amount
generally is the Gross Distribution minus the Cost (investment in the
contract). Additionally, as a general rule, the pension/annuity articles
of most tax treaties allow the country
of residence (as determined by the residency article) to tax the pension or annuity under its
domestic laws. This is true unless a treaty provision specifically
amends that treatment. So if you are a resident of the US, this pension will be
taxes under US tax laws (unless exempt under treaty)
Please
refer to this IRS link for more information:
https://www.irs.gov/Businesses/The-Taxation-of-Foreign-Pension-and-Annuity-Distributions
Since this is not a South African governmental pension/annuity, you will need to include this SA annuity on your
US tax
You
would include this amount (in USD) on line 21 of your 1040. You enter this
income under Federal Taxes> Wages and Income>I'll choose what I work
on (jump to full list)> scroll down to "Less Common Income">
Miscellaneous Income (start/revisit/update)> Other reportable income
(start/revisit/update) enter this information here as foreign (or South African)
annuity income and the amount in USD (see screenshot)
If you paid any SA taxes on this income, you would be
able to take a Foreign Tax Credit on your US tax return. (See this link for additional information on how to Claim
Foreign Tax Credit)
To enter your foreign taxes under Federal Taxes> Deductions and Credits >I'll choose what I work on (jump to full list)> scroll down to "Estimates and Other Tax Payments"> Foreign Taxes (start/revisit/update)
Please note : If you
have foreign bank accounts, you may be required to file a Report of
Foreign Bank and Financial Accounts (FBAR) if are a US citizen or resident and:
- you had a financial
interest in or signature authority over at least one financial account
located outside of the United States; and
- the aggregate value of all
foreign financial accounts exceeded $10,000 at any time during the
calendar year reported.
To be directed to
the US Treasury Government Website to prepare a Report of Foreign Bank and
Financial Accounts, click FBAR
(TurboTax does not support this form)
