How do I declare my pension income from the UK?

[LinaJ2020 · Accepted solution]

Tax treaty-related matters are out of scope for our advice.  Generally, the UK pension is taxable to the US. However, you would need to consult another professional who is specialized in it for verification.

If it is taxable, to enter the UK pension, you will need to create a substitute form 1099-R in TurboTax. 

Here are the steps:

In TurboTax online,

• Sign in to your account and select Pick up where you left off or follow prompts
• At the right upper corner, type in 1099r, then Enter
• Select Jump to 1099r
• Follow prompts
• Next screen, Choose your bank or brokerage, select I'll type it in myself
• Follow prompts.  On the screen  Tell us if any of these uncommon situations apply 
• Check the box I need to prepare a substitute 1099-R and follow the prompts.  

As to the Federal ID, UK pensions often do not have the ID number.  Please try entering nine 9s.  If electronic errors occur due to 1099-R data entry, enter the pension under Miscellaneous income, see instructions below. As long as the IRS has the pension reported and included in total income, it is not problematic. 

• To your left, select Federal
• From the top, select Wages and Income
• Scroll down to last section -Less Common Income -select  Miscellaneous Income, 1099-A, 1099-C- Start 
• Next screen, scroll down to Other Reportable Income- Start
• Follow prompts

For more information, see http://www.irs.gov/Businesses/The-Taxation-of-Foreign-Pension-and-Annuity-Distributions

If it is not taxable to you,

• report your full amount as instructed above. Then enter the treaty exempt amount as negative amount (e.g. -5000) under Other Reportable Income as instructed above.  

• Download and fill in a Form 8833 Treaty-Based Return Position Disclosure from IRS to claim an exception.  https://www.irs.gov/pub/irs-pdf/f8833.pdf
• You cannot e-file.  You can still use the TurboTax program to prepare your tax forms, but you need to print them out and submit them by mail along with form 8833. 

[dennisdjs]

Hello,

As to the Federal ID, UK pensions often do not have the ID number.  Please try entering nine 9s.  The 9's doesn't work

[ToddL99]

You don't need to have an EIN for a foreign pension; you can report it as Miscellaneous Income.

You have two options to report a foreign pension: 

 
Option 1 (Best choice) : You can enter the foreign pension income on Form 1040, Line 8 as "other income" or "foreign pension."   
 

You won't need a  Payer ID (FEIN), state or zip code with this approach.  

The IRS wants the pension reported as income - unless your pension receives special tax treatment, it is perfectly OK to report it as Miscellaneous Income.  

To make entries on Line 8, go to the Other Reportable Income interview, the very last interview in Wages and Income (Federal Taxes tab > Wages & Income  > Less Common Income > Miscellaneous Income).  

 
In TurboTax Online, enter "other reportable income" in the Search Box and then select "Jump to Other Reportable Income".  

 
If you choose this way, then you won't have to create a substitute Form1099-R, by filing Form 4852 and you won't encounter e-file errors over the Payer ID.   
 

However, the end tax result (in terms of United States tax rate and amount assessed) will be identical under both methods.  

Option 2: Prepare a Substitute Form 1099-R and a Form 4852 to report that foreign pension on your tax return.  

 
In the Retirement Income interview for Pension Plans (Form 1099-R), check "I need to prepare a substitute Form 1099-R" and follow the instructions in the interview.