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.
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.
What types of items belong in the “Lump‑sum Distributions” category?
Report a distribution here only if all 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. (as listed in Form 1116 categories).
- 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. purposes. (IRS Pub. 575 applies.)
✅ When to enter this in the program
Go to:
Federal → Deductions → Select My Forms →
Credits → Foreign Tax Credit → Form 1116 → Lump‑sum Distributions
✅ Examples of amounts that SHOULD be reported 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
❌ Do not report the following here
- Regular periodic pension payments (those go in the appropriate income basket, 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
Additional Information
See Pub. 575 for more information.
Refer to Form 1116 Instructions for complete instructions.