I have been following all the exchange messages regarding how to report foreign pension for tax purposes. There should not be any doubt that at Federal level the most simple way to report it, and in my view the correct one, is to report it as “other income” meaning to say as “ miscellaneous”. Particularly it must be reported on 1040 Federal Tax Return line 8 under “ other income” indicating clearly that it’s a “ Foreign Pension from xxx”. In xxx write the country. If you want you can attach an addendum with your foreign payor tax identification, if any. All payor have a tax identification in their country.
Regarding those that live in States that provide “pension exclusion” that won’t be allowed if the foreign pension is reported as”miscellaneous”, report it directly on the 1040 State Tax Return line available for “retirement, pension…” and the like, because “ pensions are pensions, doesn’t matter where they come from” and must be reported as pension. This is the response I was told in person by NJ Division of Taxation Information Center. Furthermore, I got from the same State Taxation Regulatory Services the assertion in writing that “foreign source pension payments may be allowed exclusion if the beneficiary is 62 or older and his/her total household income is 150,000.00 or less”.
This shows, at least for those residing in NJ, that pensions can be reported as pension in the same line than US source pension, and consequently is not compulsory to report it as miscellaneous.
I do hope this helps as a reference.
