How do we report UK State and UK MOD Pensions to IRS and how do we enter them into TurboTax?
Wife and I are US citizens and US Virginia residents paying taxes in US on worldwide income. Total AGI for 2021 will be above $200,000.
Wife gets a UK State Pension and a UK Ministry of Defense (MOD) Pension (prior UK citizen). Together those pensions are equal to $9700. These are paid monthly as long as she is alive. UK doesn't tax these under US/UK Double Taxation protection rule.
After reading many posts on this subject regarding reporting and Turbo Tax entries we have questions:'
1. These foreign pensions can be reported individually on 1099-R we build ourselves or entered as MISC income. Correct?
A. Advantage or disadvantage to either method?
2. Are either or both subject to US taxation? Can they be reduced or eliminated from taxation by entering negative amounts on MISC income section in TurboTax as some have indicated because they are below $10,000 and/or not taxed by residents living in the UK. Need reference if they can be reduced or eliminated.
3. Any relieve in the US/UK tax treaty for this specific type of pension? Read it but it's confusing?
