Net investment income tax and Overseas Pension

Forum|Forum|3 years ago
September 29, 2022
3 replies
15 views

Hi,

I found a couple of different approaches on this community about how to report the income if I cash out an overseas pension- this would be a non-qualified pension in the eyes of the IRS, I believe. As such, I think the income would be considered Net Investment Income and subject to Net Investment income tax, based on my forecast total earnings this year. I understand Form 8960 is used for calculating any tax owed and that for form is included in TT online. My question: is there a way I should define the income from my overseas NON-QUALIFIED pension in TT to ensure it is factored as net investment income on form 8960?

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Richard67Author

Level 5

@pk12_2 I would be interested on your view on above

pk_

Level 15

@Richard67 , first my apologies for being so late in answering your query.

No I do not believe that you have to do anything special. However, I have never tried this on TubroTax. I will try this later today and come back to you if I see any issues. I have Home and Business download version and should be able to try the scenario. The on-line version should behave similarly but I am not familiar with that.

Richard67Author

Level 5

Thanks @pk12_2, and I will explain why I asked. I was using taxcastor just to get a rough estimate of what my tax bill will be this year. I noticed if I put the pension cash out under "other" income then it did not seem to accurately calculate the NIIT. However, if I put the pension cash out under dividends it did properly calculate the tax (based on my estimate of what it should be). Of course taxcastor offers simplified options but that is why I am asking.