My client has an Aunt who is a citizen of Mexico and now lives in Mexico. YEARS ago she lived and worked in the US (California) and paid into a retirement. She found out last year Prudential had been trying to find her for years and paid her a huge lump sum of back distributions and started monthly distributions. My client just brought me the 1099-R (s) yesterday and I'm not sure how to file this. I thank you in advance for any guidance!
Hello, aboffice! Thanks for reaching out!
For guidance on how to report this 1099-R, we suggest reviewing this article, as it is addresses how to report the commonly employed distribution codes.
Hope this helps!
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@sjrcpaThanks for flagging me.
@abofficeIf your client's aunt is a green card holder, the pension to the extent taxable under normal rules would be subject to US tax and her aunt may claim a credit on the Mexican return for US taxes paid. Otherwise, the pension is taxable only to Mexico, where she is a tax resident, based on Article 19(1)(a) and (2) but she must submit W8-BEN to claim the treaty exemption. In the event it should have been treaty exempt but no W8-BEN was filed before the distribution, a 1040-NR may then be filed for a refund claim.
Still an AllStar