Correct, you have to report a foreign defined benefit plan on form 8938 only if the total aggregate balance of foreign accounts reaches $10,000 during the year. You should use a currency calculator to get the USD amount. You also don't have to if you claim a tax treaty.
Should you need to enter the pension, here's what to do in TurboTax:
To enter foreign pension in TurboTax online program, you will you would NOT treat it as "other income," rather, you will create a mock form 1099-R.
Within your Personal Tax section, Under Retirement Plans, select the IRA, 401(k), Pension Plans (1099-R).
- On screen, Your 1099-R, answer Yes and select Continue
- Next screen, Choose your bank or brokerage, select I'll type it in myself
- On the screen Tell Us Which 1099-R You Have, check the box
I need to prepare a substitute 1099-R and follow the prompts.
If your foreign issue does not have an ID number, you can try entering nine 9s. If errors occur due to this entry, you can enter the pension under Miscellaneous Income. The following link provides the info for both entries:
https://ttlc.intuit.com/questions/3687929-where-to-enter-foreign-pension-income-and-foreign-tax-cred...
Remember, if you have to go through this, then you may be eligible to claim the foreign tax credit. You'll need to complete Form 1116.
Here's how to get to Form 1116 for 2020:
- Make sure you've entered all your foreign income.
- From within your return, search for foreign tax credit and select the Jump to link in the search results.
- Answer Yes to Did you pay foreign taxes in 2020 or have credits to use from a prior year?
- Follow the instructions to get the credit or deduction.
There's a deduction available as well as well as a credit but in most cases, taking the credit works out better. We'll help you decide which one's best for you when you go through this section.
