How is foreign pension reported with no 1099 form?

Forum|Forum|1 year ago
February 25, 2025
3 replies
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I see suggestions on reporting foreign pension as "Other income". Will the interview process enable me to also report the foreign taxes paid on that income or will I need to claim a foreign tax credit in a different way?

I am using the desktop version of Turbotax Home & Business 2024.

Thank you very much for any recommendations!

TurboTax Home & Biz Windows

ThomasM125

Level 15

You need to report pension income as such, it should not be reported as "Other" income. You can do this in TurboTax by entering a substitute Form 1099-R.

To enter a substitute form 1099-R in Turbo Tax Online follow these instructions:

Find the Retirement Plans and Social Security menu option in the Wages and Income section of TurboTax
Start or Update IRA, 401(k), Pension Plan Withdrawals (1099-R)
Choose Add (Another) 1099-R
Choose I'll type it in myself
Choose the source of your 1099-R form
Enter your pension income into the Form 1099-R entry screens
When you come to the screen that says Do any of these situations apply to you? Check the box that says I need to file a substitute 1099-R and follow the instructions

For the foreign tax credit, find Estimates and Other Taxes Paid in the Deductions and Credits section and choose Foreign Taxes. Work through that section and indicate that you want the credit as opposed to a deduction, as it will probably give you the better benefit. Choose the "no" option on the page that says No Other Income or Expenses. Choose Passive income for the type of income. Choose the country you earned the income from and enter a description of the income and the amount earned. Enter the foreign taxes paid when instructed to do so. You probably don't need to enter much else on the rest of the screens but you can enter anything that you think applies to you. You will see your foreign tax credit listed on line 1 of Schedule 3 Additional Credits and Payments.

You will only get a credit to the extent you have taxes on foreign income in the current year. Any unused credit can be carried back one year or forward ten years.

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elipsett

Level 2

This is a problem every year, mostly because TurboTax changes a little bit every year, and the instructions that applied last year don't apply any more.
Your instructions here may be perfect for the online version, but do not seem to apply the 2025 Desktop version. In particular, there does not seem to be a "I'll type it in myself" option, and there is no " Do any of these situations apply to you?" form, or a checkbox that says "I need to file a substitute 1099-R."

Can you (ie, Intuit) provide a complete guide, hopefully with either screenshots or at least accurate instructions, on how to actually do this?
If you (Intuit) can't prepare a complete guide, can you at least give me specific instructions on how to input pension received from a foreign govt?

Thank you.

Jscg

Level 2

@DaveF1006 before advising people not to use a substitute 1099-R, you really need to check what state they are in, because some states offer preferential tax treatment for pensions (even foreign ones), that people won't get if they don't classify the income as a pension on the federal return. If you search this forum, you'll find posts where people in states like New Jersey ran into that issue. They couldn't report pension income as "other" income without suffering a material increase in their state income tax, because the income had to be on line 5b of the federal return in order to flow to the correct place in the state return. A quick Google suggests that states with special treatment for pension/retirement income include Georgia, Delaware, Illinois, Iowa, Mississippi, Pennsylvania, Michigan, New Jersey, South Carolina, Virginia, Wisconsin and Utah, so I'd be very cautious about suggesting that anyone from those states enter a pension as "other reportable income". The substitute 1099-R seems to be the only approach that ensures the correct tax treatment.

I followed Davef1006 instructions and it is charging me $493 on my $1,603 total for the year pension i earned in 2025. Thats 30.8% ?? We are in the 22% bracket.

Alfreddo

Level 2

Hi,

I have the same situation.

I've followed all the appropriate steps but the system never asks me to enter the amount of foreign tax paid in 2024. The only option allowed is revisit tax credit carryovers (2023). It goes in circles. There was however a question on the 1090DIV or INT section asking about foreign taxes, but I assume that this applies only to that catgory of income and, anyway, it would be impossible for me to determine how much applies to that income. I am gong nuts.

Fred

peter-ludemann

Level 2

Each situation where there is income that asks for US/state taxes, there should be an option for reporting foreign taxes. A 1099-R doesn't have a place for foreign taxes paid - and Canadian RRSPs/RRIFs are treated as a 1099-R by TurboTax (surprise: the Canadian gov't deducts taxes). Corporate pensions have tax deductions. Capital gains (Schedule B) have tax deductions. Etc. etc. (CPP/OAS don't have deductions, per the US-Canada Tax Treaty)

It's a nightmare gathering this information and updating the form 1116.

I suppose Intuit has done the math and figure it's not worth supporting the millions residents and citizens who have foreign income. But it should be pretty easy to collect the necessary information (I have 40+ years experience in software development).

(And I suppose it's way to much to ask that you support Canadian NR4 forms, although you do support Canadian RRSPs/RRIFs, which are reported on NR4)