401K Distributions Overseas

If a US Citizen emigrates to another country and then redeems his 401K's, does the person have a US Tax liability then?

tks all

bw

Reply to
Billy
Loading thread data ...

Yes, since an emigre who retains his US citizenship is taxed just like a US citizen back at home -- all US citizens are taxed on worldwide income regardless of where they reside (though emigres do have the foreign earned income exclusion).

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

I'm not sure if you meant it this way but you imply that the 401(K) would come under the exclusion. As it is not "earned" income, however, it is not subject to the exclusion. Earned income means income paid within a year of the year in which it is earned. Retirement plan distributions, including 401(K), apply to all years worked and don't meet this requirement.

Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Reply to
L K Williams

tks all

bw

Reply to
Billy

Becoming a citizen of another country does not terminate your US citizenship. You need to take affirmative actions to relinquish your US citizenship. Until you do so (and perhaps for several years afterwards) you are still subject to all US income tax laws.

Ira Smilovitz

Reply to
Ira Smilovitz

Still not clear. You can be a citizen of the US as well as the other country.

Assuming you are not a citizen of the US, the 401k is still US source income, so you would have to file 1040-NR. See:

formatting link
At one point California would go after 401k distributions of people who put money into their 401k while they were California residents but moved out of state (and were non-residents when receiving their distributions). But the federal government eventually ruled that they cannot do this. So it's ironical that US based 401k's are treated differently.

Reply to
removeps-groups
Reply to
removeps-groups

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.