Received lump sum pension from defunct Canadian company.

elvis1 · Post by **elvis1** » Wed Mar 21, 2012 4:19 pm

Hi,
I am a US citizen now and live in US. I just received a lump sum pension from a Canadian company I worked for. 54400 gross. They took 25% off 13600. How do I declare this next year? How do I prevent paying a bunch more tax on it? Thanks.

nelsona · Post by **nelsona** » Wed Mar 21, 2012 4:22 pm

Report this on 1040 (fully taxable), and then repot that income on 1116 (general) and use the 25% tax as a credit.

nelsona · Post by **nelsona** » Wed Mar 21, 2012 4:23 pm

... and there may be some way to reduce the Cdn tax, if you make very little income in US (which is unlikely).

elvis1 · Post by **elvis1** » Wed Mar 21, 2012 4:24 pm

Will I be hit hard on additional tax? Will my Turbo tax handle this? Thanks for the swift reply!

nelsona · Post by **nelsona** » Wed Mar 21, 2012 4:27 pm

The income is added ON TOP of your other income, but the credit is only given at yoru average tax rate. It usually means some additional tax, unless you are in the low tax bracket.

Turbotax handles it.

elvis1 · Post by **elvis1** » Wed Mar 21, 2012 4:29 pm

Thanks Nelsona. My avg tax rate meaning? I make ~ 100,000.

nelsona · Post by **nelsona** » Wed Mar 21, 2012 6:13 pm

turbotax

JGCA · Post by **JGCA** » Wed Mar 21, 2012 6:47 pm

The fact you make 100K does not tell us what your avg tax rate is , it may tell you what your marginal tax rate is! Since you are probably itemizing and taking other deductions to reduce TI do it on turbotax to see.

elvis1 · Post by **elvis1** » Wed Mar 21, 2012 9:57 pm

Thanks so much guys. I do appreciate it.