Thank you for asking this
question. Please note from the outset that this answer does not address
the tax treatment of your (Luxembourg) pension income, from the
perspective of any other country aside from the United States. It also
does not consider any tax treaty provisions that may be in effect between the
US and Luxembourg. In other words, the scope of this answer is
restricted to the US tax treatment and reporting of this item only. Any
taxes due or forms required by the other country involved are beyond the
purview of this response.
That said, there are some
good existing answers on this very topic (foreign pension income, that is), on
a few of the other TurboTax AnswerXchange threads. They provide
mechanical instructions for entering foreign pension income into TurboTax (and
thus onto a US tax return). Here are those links, so that you can read
them for yourself:
https://ttlc.intuit.com/questions/3175138
https://ttlc.intuit.com/questions/3642520
https://ttlc.intuit.com/questions/3833087
Essentially those answers
propose one of two different solutions. Under one method you can input a
foreign pension or non-US Social Security payments into TurboTax (and thus
report them on a US tax return), by creating a "substitute" Form
1099-R. It does not matter whether the income was a one-time lump sum
payment, or an annual (ongoing) pension stream of monthly payments. It
still gets reported, and taxed, the same.
Alternatively (and also
preferably as well, because it is easier to do), you can enter the foreign pension
income on Form 1040, Line 21 as "other income" or "foreign
pension." If you choose this way, then you won't have to create a
substitute Form1099-R, by filing Form 4852.
However, the end tax result
(in terms of United States tax rate and amount assessed) will be identical
under both methods. You can enter a Line 21 amount in TurboTax by using
the following pathway Federal Taxes -> Wages & Income -> Less
Common Income -> Visit All and then proceed through the interview until
you find an appropriate place to declare the foreign income and type in an
accompanying description.
Thank you again for asking about this.
