Lump‑sum distributions refer to foreign‑sourced pension or retirement plan distributions that are paid out to you in one single payment rather than periodic payments. If you received a lump‑sum distribution from a foreign pension plan and paid or accrued foreign income taxes on that distribution, you may be able to claim a Foreign Tax Credit on Form 1116.
Report a distribution here only if all of the following apply:
- You received a one‑time lump‑sum payout from a foreign retirement or pension plan.
- The income is foreign‑sourced, meaning the pension plan or employer is outside the U.S.
- You paid or accrued foreign taxes on the distribution and want to claim a credit for those taxes.
The payout is governed by special lump‑sum distribution rules, which may require a special calculation to determine the taxable portion for U.S. tax purposes.
Good to know: If you qualify, TaxSlayer walks you through the required calculation in the program — you don't need to fill out the IRS's lump-sum distribution worksheet by hand.
Examples of What Belongs Here
- A one‑time payout from a foreign employer's pension plan
- A lump‑sum distribution from a foreign government retirement system
- A distribution from a foreign private retirement plan that taxes you at the source
What Should NOT Be Reported Here
- Regular periodic pension payments — these go in the appropriate income basket instead, usually Passive or General
- U.S. pension or retirement distributions
- Foreign distributions on which no foreign taxes were paid or accrued
- Lump‑sum distributions that are not retirement‑related
See Pub. 575 for more information on lump-sum distributions generally. Refer to the Form 1116 Instructions for complete instructions on this category.
Program Navigation (Where to Enter)
- Federal
- Deductions (Select my forms)
- Credits
- Foreign Tax Credit
- Form 1116
- Lump‑sum Distributions