Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: If you retire from a company in the United States and receive a retirement pension, and you move to another country, do you still have to pay federal income tax?
A: If you are a U.S. citizen, you will generally have to pay U.S. taxes even if you reside outside the country. Keep in mind, however, that foreign tax credits can minimize the impact of double taxation, and that the foreign earned-income exclusion for U.S. taxpayers does not apply to pensions. To get the specifics on what applies to your situation, review the tax treaty between the applicable country and the United States. You can find the treaty at most IRS offices.
Q: I had some stock in Baltimore Bancorp, which was bought out by another bank, so I was paid off for the stock that I had. Is there a certain period where I can reinvest the money without having to pay income tax on the gain on the stock?
A: No; gains on the sale or redemption of stock are taxable as of the transaction trade date. You may not defer the tax on these gains through reinvestment.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
Members of the Maryland Association of Certified Public Accountants will answer tax questions from readers until April 15 and also offer a Tax Tip of the Week.
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 County 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 the 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.