@pk @KarenJ2 - thanks for your answers
Since my gross salary (net salary + UK tax + national insurance + the amount that 'I' contribute to my pension) will be below Foreign Earned Income Exclusion (FEIE) limit; I have no intention to deduct any of them from my income (neither national insurance nor my pension payment 'Y')
So I will be using actually a conservative approach as you mentioned above.
However I am confused with the 'Z' (the contribution of my employer on pension scheme)
I don't see it in my pay roll and even no tax will be realized according to US-UK treaty; I am not clear how to report it
a) Do I report my income as X+Z together? (Since Z is not in my pay roll; it will be difficult to show it I guess)
b) If not; how do I report Z? I found below answer from @Irene2805
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- How is the pension correctly reported in Turbo Tax?
to report the pension in TurboTax, report the full amount of the pension under the Social Security income section and then report the same amount (as a negative amount) as other income on line 21 of your 1040. You will also need to attach a form 8843 (which is not supported by TurboTax) to a file by mail copy of your return.
Please follow these steps:
- On the Wages & Income screen, scroll down to Retirement Plans and Social Security.
- Click the Start/Revisit box next to Social Security (SSA-1099, RRB-1099)
- Click the Yes box on the screen, Did you receive Social Security or Railroad Retirement benefits in 2019?
- On the Tell us about the benefits you received screen, enter the amount of your foreign pension in Box 5.
- Back on the Wages & Income screen, scroll to Less Common Income.
- Click the Start/Revisit box next to Miscellaneous Income, 1099-A, 1099-C
- On the next screen, click the Start/Revisit box next to Other reportable income.
- Click the Yes box on the Any Other Taxable Income screen.
- On the next screen, enter the amount of your pension as a negative number. For Description enter “UK pension offset” (or something similar).
The negative number will appear on line 21 of your return and will negate the entry for your UK pension.
To exclude your UK pension from taxable income, you will have to include Form 8833 - Treaty-Based Return Position Disclosure. Unfortunately this form is not available in TurboTax. Download the form from the IRS website, complete it, and include it with your return. [You will have to mail in your return.]
