itonewbie
Level 15

Reporting is the simplest question of all but there is much more than that you'd need to find out.

To answer your first question, you should, by right, report that on the line for pension.  Since ProSeries doesn't provide for a notation for foreign pension (unlike Lacerte and ProConnect Tax), you won't be able to e-file without an EIN.  One way to get around that would be to use the Canadian RRSP input screen to record the distribution.

To determine whether the distribution may be exempt under the treaty, you'd need to know exactly what kind of pension it is.

If it can't be exempted, you'd need to establish your client's basis according to US tax law and principles, which will including reviewing your client's tax position on the prior year returns and determining whether it involves years prior to the establishment of US tax residency (that may precede the acquisition of US green card).

Since foreign pension plans are generally considered trusts for US tax purposes and investments such as ETF and mutual funds within these plans constitute PFICs, which are subject to a punitive tax regime, you will need to review the historical details to determine whether the plan(s) should be classified as nonexempt employees trust(s), grantor trust(s), or a hybrid of both.  If your client did not comply with the compliance requirements, make the relevant elections, or pay the applicable taxes, your client could have significant exposure for reporting requirements and tax liabilities, especially since SOL is tolled for incompliance.

I would tread carefully as the IRS has gotten very good, over the years, at connecting the dots when it comes to international tax compliance as well as enforcement.  Information such as international pension could give them reasons to look a bit closer.  You should, therefore, be aware of the underlying issues to help your client understand and mitigate any related risks and potential exposures.

---------------------------------------------------------------------------------
Still an AllStar