I tried this approach and ended up with a large increase in my tax. I normally enter the pension values as schedule 1 income. The Canada Pension Plan form is called NR4 and it reports the amount in $CDN. I use the average annual conversion rate to come up with $US. The UK does not provide me with a form so I declare it and I have to sum up the monthly amounts in my bank for the year and use a calculated conversion rate as well based on 12 different monthly conversion rates. I send a note to the IRS.
If I say the benefit is not taxed I get the large tax. If I say there were taxed I do not end up with the same answer either.
