Q: What are the federal and CA state laws about paying taxes on unrealized gains and losses from foreign pension accounts?
The above question pertains to government run pensions in UK and NZ. There is contradictory info out there so I'm trying to find the exact tax laws that address this. To clarify, these accounts aren't currently being distributed and don't receive any dividends or payments until retirement age.
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A:
Understanding the tax implications of unrealized gains and losses from foreign pension accounts can be complex. In the United States, the IRS generally does not tax unrealized gains. However, certain foreign pension accounts may be treated differently under specific tax treaties or reporting requirements.
For California state taxes, the state typically follows federal guidelines regarding unrealized gains. Nevertheless, California does not recognize all federal tax treaties, which could affect how your foreign pension is taxed. It is important to determine if California has specific rules or exceptions that apply to your situation.
To get a clear picture of your tax obligations, you may need to review the tax treaties between the U.S. and the countries where your pensions are held. Additionally, you should ensure you are in compliance with any required reporting for foreign accounts, such as filing the FBAR (Report of Foreign Bank and Financial Accounts) if necessary. Understanding both federal and state requirements is crucial to avoid potential penalties.
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