Members of the Maryland Association of Certified Public...


March 09, 1995

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I draw Social Security both from the United States and from a foreign country. I know taxes are due on the Social Security payments from Uncle Sam, but must I also report and pay tax on the payments from the foreign country?

A: Generally, a U.S. citizen is taxed on all income received, regardless of source. The portion of the foreign Social Security benefits you must include in your income is calculated based on the amount of benefits expected to be paid to you (based upon your age) and the amount you have contributed to the plan. Refer to IRS Publications 575 and 939 to make that calculation. These rules may vary under the tax treaty between the United States and the foreign nation.

Q: Could you please explain the pension exclusion for taxpayers over age 65? I don't understand what it is.

A: Maryland allows taxpayers who are age 65 and over to exclude some of their pension income. Using the new Form 502PE to compute the exclusion, you need to know the taxable amount of your pension incomes and the total Social Security benefits received. The most you can exclude for 1994 is $13,600 less the Social Security benefits received.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip.Selected questions will be answered in the Business section. No questions will be answered by phone. Please leave your name and phone number.

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