Foreign Pension
My wife is a legal resident of the United States (Green Card) and presently retired. Visiting Japan last year she learned that she was eligible for a Japanese Government Pension (basically their Social Security) as she paid into the system during her working years. She now receives a small monthly payment but to make up for pay amounts she was due, the government sent her a lump sum payment of 24k. Is a foreign pension like this likely taxable on our 1040? We plan to report the full amount.
Terry Says
Yes, Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts. If you earned foreign income abroad, you report it to the US on Form 1040.
You might need to make an estimated income tax payment this year to avoid a penalty. Ask your tax preparer. (And this might boost her income enough to increase her Medicare Part B premiums, in the following year.) Read this: https://www.terrysavage.com/understanding-irmaa/
