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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:
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)
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:
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)
In terms of the tax treaty with South Africa (which was specified in the original question)
https://www.irs.gov/pub/irs-trty/safrica.pdf
TAX CONVENTION WITH SOUTH AFRICA
GENERAL EFFECTIVE DATE UNDER ARTICLE 28: 1 JANUARY 1998
ARTICLE 18
is a non-government annuity taxed only in South Africa if the person is a resident alien in the USA? it appears to be so - perhaps better to ask the IRS (in writing).
That's not how I read the treaty with South Africa. Perhaps if you can comment on that?
Or does this mean the annuity is taxed by both countries? (which would be immoral to say the least)
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