I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

[Lcpalmer1]

AmyC,

Thank you for the response.  I am familiar with the treaty, what i am trying to determine if

1. What document the UK will send me so I know how much pension I need to report?

2. When do they issue the document?

I would be surprised if I just add up the deposits in my bank account for 2020 to find the amount as I am assuming I will need to provide more information when I report my UK pension. 

Thanks, 

[crztchr]

I do not understand what this comment in the subject means.

I am reading everywhere that my UK government pension IS taxed in the US. Last year I put it in as income and took off 25% which was the allowance given in UK. I did this because of what I read as no one could answer this simple question not even the IRS who told me to employ a tax expert.  I need more help from Turbo tax on this issue please.

Now I am reading put it in as income then take it out?  That would mean no taxes. This pension in UK would be taxable if I was a UK resident so why would it be non taxable here?

The comment "Yes, but only to the extent of the UK pension amount that. is included as part of your taxable income???." from a previous quote means whta?

Thanks for any help as here I am again another year and still clueless haha

[MarilynG1]

Click this link for details on Reporting Foreign Pension Income.  

As for what documents the paying country would send you, we would have no way to determine that.  

You could reach out to the Pension Payer or the Tax Authorities of your country. 

[apollo860]

HI haven't declared my Government social security pension on my 1040 tax return, the  pension is below the taxable amount in uk do I still have to declare the pension, or just ignore ???

[ToddL99]

To clarify, where is the pension coming from (UK or US), are you a US citizen/resident alien, where do you live and what other income do you have?

[crztchr]

I am a US resident and my question is about UK government pension. It seems like there are contradictory messages on here.

1.If the pension us under the personal allowances in UK someone said they did not put it on the 1040 - mine is under.

OR do you put it on then take it off on line 21 as someone else said?

Also one expert is talking about looking up the UK?USA tax agreement which is very little help as I read the article 18 on pensions.

2. Last year I just paid tax on 75% as I read somewhere you could write off 25% but I think that is a lump sum thing.

3. On another post someone said put the whole amount on then take off the appropriate amount in line 21.

what is the ?appropriate ? amount #1 #2 or #3 above.

I just want to get these taxes done..........  does anyone really know?

[crztchr]

I am in the same boat.....  Ido not think Turbo tax "experts" really know.

[ToddL99]

If you are a U.S. resident, then you must report your foreign pension as income on your U.S. tax return.

If this is a UK governmental pension, you would be able to claim a treat exemption on Form 8833 (statement to claim a treaty exemption) which you would attach to your mailed in tax return.

With respect to government pensions/public pensions/annuities (typically covered under the Government Service article) or social security payments, generally the payments are only taxable by the country in which the government is making the payments.

From @DS30 : Please click this link for more information on IRS - Foreign Pension and Annuity Distributions

If this is a UK governmental pension, you would be able to claim a treat exemption on Form 8833 (statement to claim a treaty exemption) which you would attach to your mailed in tax return. 

You would still include the amount on your return under the social security section (as if  a Form SSA-1099but you would also include a negative amount for this UK governmental pension on line 8 and the description should read "Tax exempt under US-UK tax treaty Article 17")  (This is your option #3).

To enter the treaty exemption amount in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "other reportable income" in the search bar then select "jump to other reportable income". TurboTax will guide you in entering this information.

[crztchr]

Ok Todd,

So we are gettting somewhere. I know how to add the UK government pension to my social security but how do I put in the credit on line 8??

"would also include a negative amount for this UK governmental pension on line 8 and the description should read "Tax exempt under US-UK tax treaty Article 17") "

I opened the FORMS and chose 1040 and line 8 says. OTHER INCOME FROM SCHEDULE 1 LINE 9 (note it says INCOME.  Am I supposed to manually change the figures in this column for the negative amount of my pension and there is no where to type in the Tax exempt statement. - Or am I in the wrong place for line 8???

CRZ TCHR. 

[ToddL99]

You are in the right place ("Other Reportable Income"), you just need to enter a negative number - this is a separate entry (see sample screen below)

Even though it states "Income", this is the correct (actually the only) place to make this adjustment.

[nickpbc]

I'll soon be in the same boat as a US resident with a UK state pension coming up. I'd be particularly interested to get any opinions on whether it will be necessary to file form 8833 as previously mentioned in this thread, as not being able to file electronically for both federal and state returns seems like a painful burden. Looking at form 8833 instructions on the IRS site here https://www.irs.gov/individuals/international-taxpayers/claiming-tax-treaty-benefits it seems like there are 2 of several exceptions (below) that might apply. Any thoughts?

Exceptions

You do not have to file Form 8833 for any of the following situations:

1. You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.
2. The payments or items of income that are otherwise required to be disclosed total no more than $10,000.

[ReneeM7122]

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:

1. Make sure you've entered all your foreign income.
2. From within your return, search for foreign tax credit and select the Jump to link in the search results.
3. Answer Yes to Did you pay foreign taxes in 2020 or have credits to use from a prior year?
4. 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.

[tomwilley]

Hi Guys,

From reading the various replies, I'm pretty comfortable of what to do when reporting my wife's UK government pension on my tax forms and the need to submit form 8833. Where I'm falling down is how to actually fill in form 8833.

Specifically, what do folks enter for lines 2, 4, 5 & 6. 

Help.

Tom

[nickpbc]

Probably you do not need to file form 8833 at all, as one of the exceptions for having to file it (see link above) explicitly states,

You do not have to file Form 8833 for any of the following situations:

1. You claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants

It would certainly be nice to get a definitive confirmation of this from an expert though, as use of form 8833 precludes electronic filing, which is a serious inconvenience.

[DaveF1006]

 It depends. There are other exceptions for filing a 8833 beside what is listed above. Please read page 3 in the following publication for more exceptions. 

1. You claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate.
2. You claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants.
3. You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.
4. You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return.
5. The payments or items of income that are otherwise required to be disclosed total no more than $10,000.
6. In this instance, you are modifying taxation from a pension thus does not require a 8833. 

Now, if were taxed in your foreign country and if that country has a tax treaty with that country, you can claim a foreign tax credit for the taxes paid.