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Pension from Cayman Islands

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Canadiangal

Junior Member
What is the name of your state (only U.S. law)? CT

Hoping someone might be able to give me some clarity on this.

I am a Canadian citizen who has been in the USA on a L1 visa since July 2013. Prior to this I worked in the Cayman Islands from November 2010 until June 2013. During my time in the Cayman Islands, both my employer and I contributed to my pension, based in the Cayman Islands, as per local law. As the amount was over $5k, I was required to wait 2 years before being able to receive this money (pension refund), once I left the islands.

I am due to receive the money in July of this year, however am not sure if it will be subject to taxes. It was earned while not living or working in the US, however I am now a US resident for tax purposes, and will receive this money while living and working in the US.

Any advice is greatly appreciated!
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? CT

Hoping someone might be able to give me some clarity on this.

I am a Canadian citizen who has been in the USA on a L1 visa since July 2013. Prior to this I worked in the Cayman Islands from November 2010 until June 2013. During my time in the Cayman Islands, both my employer and I contributed to my pension, based in the Cayman Islands, as per local law. As the amount was over $5k, I was required to wait 2 years before being able to receive this money (pension refund), once I left the islands.

I am due to receive the money in July of this year, however am not sure if it will be subject to taxes. It was earned while not living or working in the US, however I am now a US resident for tax purposes, and will receive this money while living and working in the US.

Any advice is greatly appreciated!
I would say no, its not taxable in the US because you are not a citizen or green card holder therefore you are not required to report your worldwide income on your us tax return.
 

davew128

Senior Member
I would say no, its not taxable in the US because you are not a citizen or green card holder therefore you are not required to report your worldwide income on your us tax return.
OP has been in the US since July 2013. That means the substantial presence test has been met AND worldwide income is taxed.
 

LdiJ

Senior Member
OP has been in the US since July 2013. That means the substantial presence test has been met AND worldwide income is taxed.
OP is on an L1 Visa. I think that the substantial presence test is longer for L1 Visa holders.

However I believe that the following exclusion from income applies in this case:

Income from certain annuities. Do not include in income any annuity received under a qualified annuity plan or from a qualified trust exempt from U.S. income tax if you meet both of the following conditions.

1.You receive the annuity only because:


a.You performed personal services outside the United States while you were a nonresident alien, or


b.You performed personal services inside the United States while you were a nonresident alien and you met the three conditions, described earlier, under Employees of foreign persons, organizations, or offices .



2.At the time the first amount is paid as an annuity under the plan (or by the trust), 90% or more of the employees for whom contributions or benefits are provided under the annuity plan (or under the plan of which the trust is a part) are U.S. citizens or residents.


If the annuity qualifies under condition (1) but not condition (2) above, you do not have to include the amount in income if:

•You are a resident of a country that gives a substantially equal exclusion to U.S. citizens and residents, or


•You are a resident of a beneficiary developing country under Title V of the Trade Act of 1974.


If you are not sure whether the annuity is from a qualified annuity plan or qualified trust, ask the person who made the payment.
Its from Pub 519
 

davew128

Senior Member
OP is on an L1 Visa. I think that the substantial presence test is longer for L1 Visa holders.
That would be incorrect. http://www.irs.gov/Individuals/International-Taxpayers/Alien-Residency-Examples

However I believe that the following exclusion from income applies in this case:



Its from Pub 519
You might want to read your quote again. It doesn't say what you think it does if you apply the facts you know correctly, and I'm fairly certain 90% of the plan employees are not US persons.
 

LdiJ

Senior Member
Ok,

Lets take a different tack here...

Please explain why you think that the refund of the pension money accumulated during a period when the L1 Visa holder was not present in the United States, is taxable income for the current year in the US.
 

davew128

Senior Member
Ok,

Lets take a different tack here...

Please explain why you think that the refund of the pension money accumulated during a period when the L1 Visa holder was not present in the United States, is taxable income for the current year in the US.
Because the OP is not an NRA. Did you actually read the entire portion of the section you copy and pasted from?
 

LdiJ

Senior Member
Because the OP is not an NRA. Did you actually read the entire portion of the section you copy and pasted from?
Dave...you did not answer my question.

Lets pretend she is a green card holder now, but wasn't a green card holder or a resident alien then (to get that argument out of the way) and is getting a pension refund from a foreign country. What questions haven't you asked, that must be asked, before you can determine if the money is INCOME, or merely savings?
 

davew128

Senior Member
Dave...you did not answer my question.
Because you're changing from facts to hypotheticals.

Lets pretend she is a green card holder now, but wasn't a green card holder or a resident alien then (to get that argument out of the way) and is getting a pension refund from a foreign country. What questions haven't you asked, that must be asked, before you can determine if the money is INCOME, or merely savings?
What's a pension refund?
 

LdiJ

Senior Member
Because you're changing from facts to hypotheticals.

What's a pension refund?
Interesting. Disappointing but interesting.

Canadiangal, I apologize for the fact that you are getting no clear answers here. The first step, above all, is to determine whether or not the money is even "income" in the first place. Consult with a local tax professional who will hopefully ask the questions necessary to make that determination.
 

LdiJ

Senior Member
OR go with the correct answer you were given. :rolleyes:
Wow...I don't think that anybody here is ever willing to go that far when there is a dispute. OP, please consult a local professional. Someone that will have an actual obligation to you if things go south.
 

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