Dutch/U.S./NJ tax question

Having looked at the relevant article in the treaty, I think that you would report the pension on line 16a with zero in line 16b of Form

Article 19 paragraph 4 exempts the social security benefits paid by the Netherlands to a US citizen from tax. Treasury regulations do not require the US citizen to file a treaty based provisions form. One just doesn't include the amount on a 1040.

States of the Union do not have to follow the terms and conditions of US tax treaties. Some do and some don't. NJ is one of the few states that does not start with Federal income. Therefore, we don't have a set of rules that says what can be deducted or has to be added back to federal income to arrive at NJ income.

NJ does not tax US Social Security benefits. NJ does tax pensions and also has pension exclusions. The question that has to be asked is whether NJ treats payments from a foreign country's social security system to a resident of NJ as a pension that has to be reported. I don't know. I'm willing to bet that NJ residents are not reporting foreign social security benefits that are not reported on a US federal tax return. I did read the NJ statute (54A:5-1(j)) on the definition of gross income as it relates to pensions. It deals with distributions from "an employee trust." I think it is reasonable to assume that the foreign payment does not come from an employee trust and is therefore not a taxable pension.

What do you base that on?

The law of the land. The treaty is between the federal government and a foreign country. Each state is free to tax its residents as it pleases. If you check some of the states' statutes on income taxes, you will see that some of them tax income that has been excluded from federal taxation. Just think about all those international students, scholars, researchers, etc who are excluding wages on their federal returns and being taxed by the state in which they are residing.

Even the IRS tells you that on their website: From:

Here's a quote from Pub 1031 of my former State of California: Tax Treaty A tax treaty between the U .S . Government and a foreign country may exempt some types of income from federal taxation . Generally, unless the treaty specifically excludes the income from taxation by California, the income is taxable.

Vic Dura wrote in news: snipped-for-privacy@4ax.com:

Thank you, Vic. I appreciate the help.

I had gone some time ago through the MTM website to see whether I could get re-instated as a bona-fide poster, but the robo-moderation didn't accept me.

(more thanks later)

Alan wrote in news:ho30jc$r2p$ snipped-for-privacy@news.eternal- september.org:

Thanks, Alan. That was my interpretation from reading the treaty as I accessed it through the IRS website. But I needed a tax expert reading to make sure I didn't misunderstand.

I just read the relevant portion as well, and it clearly states that I do not have to report Social Security payments. As the Dutch payments are a very clear analog/facsimile of the US payments, I think I can make a case for not stating them.

Thanks again for all your expertise, Alan, and Stu as well as Tom as well, for your expert opinions.

Tom Healy CPA wrote in news:b4bd8a8b-b566-4af0-9ab4- snipped-for-privacy@d37g2000yqn.googlegroups.com:

Dear Tom:

Given that the treaty is rather specialized, I think that I might not report this income, and later explain if the IRS would request, which I doubt they will. However, I will think this over until I send in my return.

I still have a little doubt on the Jersey situation, and hope someone else will still post an opinion.

I appreciate your gas chromatography paper, having done quite a bit myself, mainly on fatty acids. No fancy bubble detectors there, just a lttle hydrogen flame and/or Geiger counter.