How is foreign pension reported with no 1099 form?

[DaveF1006]

I can't provide you with a complete guide, but I can provide you with meaningful instructions.  First, don't file a substitute 1099 R. This is your most important step. Instead, follow these precise instructions.

1. Go to Federal on the left-hand menu. 
2. Select Wages & Income 
3. Locate "Less Common Income. 
4. Click Show More next to Less Common Income.
5. Select "Miscellaneous Income":
6. Find the last option in that list: Miscellaneous Income, 1099-A, 1099-C. Click Start or Revisit.
7. Choose "Other Reportable Income". Scroll to the very bottom of this new list and select Other reportable income. Click Start.
8. Enter the Description and Amount: Enter Foreign Pension received, and then the amount.

This will bypass the other hurdles you have experienced and will allow you to electronically file your return. Now, if you paid foreign taxes on your pension, you may be able to claim a foreign tax credit on your return.

1. Go to Federal > Deductions & Credits. 
2. Find Estimates and Other Taxes Paid and select Foreign Tax Credit.
3. Answer Yes to "Did you pay foreign taxes in 2025?"
4. When asked about the type of income, select General Category Income. 
5. Note: While some software defaults to "Passive," the IRS generally classifies pension income from past employment as "General Category" for Form 1116.
6. Add a Country: Select the country where the pension originated. 
7. Enter Income: You will be asked for the "Gross Income" from that country. Enter the USD amount of the pension again here. (This "links" the income to the tax credit; it does not double your income). 
8. Enter Taxes Paid: Enter the amount of foreign tax you paid, or that was withheld.
9. Finish out the section by pressing continue until you are done.

There will be a question in the interview asking you if you wish to take a simplified method or a general method regarding Amt. Since you are only reporting one category of income, choose simplified.

[TexasTea]

@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.

[Jscg]

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.

[DaveF1006]

To clarify, is this "charging" you on your federal or state return? If state, what state? 

@Jscg 

[Jscg]

Federal. Thanks. Not blaming you lol. Just stating what happened. It was same when filling under miscellaneous income. Don't know why they charge such high percentage. 

[DaveF1006]

It depends. A 30.8% effective tax on your $1,603 pension doesn’t necessarily mean you’re “in a 30.8% bracket.” It likely reflects how that income is taxed after credits/deductions and how it interacts with other income (e.g., Social Security taxation, phase‑outs, state tax, NIIT/IRMAA triggers, or witholding). Your marginal federal bracket (22%) is different from your effective rate on a single item.

More than likely, this amount is a result of more of your Social Security income being taxable because of the increase in income your pension generated. This added tax, combined with the tax your pension generated, may account for the $493 increase.

If you receive no Social Security, it may be an early withdrawal penalty if you are less than 59 1/2 years old and took an early distribution on your pension.

[peter-ludemann]

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)

[juham2013]

Hi,

On this topic,  I have tried different methods to no avail.

1. I reside in Texas and I am receiving a foreign pension that originates in a country with which the U.S. has a tax treaty, to help avoid getting taxed twice on the same pension!   

2. A very small portion of that pension is - based on the tax treaty - can be taxed by the IRS only,  but the majority is taxed by the foreign tax authority.  Even the majority portion is very modest, but it is taxed at around 11%.   

3. We are filing married jointly.  

4. Without my pension, we are in the 12% tax bracket,  but with the pension from overseas (and my Social Security benefits) we are going to be in the 22% tax bracket.

Questions:

A. Won't the fact that we move from the 12% bracket to the 22% bracket (higher Federally taxed income) cause me getting double-taxed?  The tax treaty is supposed to prevent that from happening.

B. How do I go about claiming a foreign tax credit (it should work in my favor, given the fairly heavy tax on the small foreign pension)?

C. I have tried Form 1116 and it just doesn't work (tried it in tax-year 2024).

D. The method you suggest (entering the foreign tax paid) also seems to not work (I tried this method in tax-year 2024, too).

E. Someone else had suggested declaring the foreign pension and then categorizing it as "Treaty Based Social Security Income Exclusion", to avoid being taxed twice on the same pension.

F. I assume that reporting the very small portion of the pension that is taxable by the IRS only, I could use "Other Reportable Income" as you suggested as the 1st method?  The only problem is that the foreign tax authority taxed it, too. So, I am not sure how the IRS will see that.

G. Tax-year 2026 will get a little more "straightforward" as the mistake alluded to above (foreign tax authority taxing the portion that only the IRS can tax) has been corrected and, I pay zero tax on the very small portion of the total small foreign pension.

Could someone save my sanity?   

Cheers!

JJ

[juham2013]

I was referring to suggestions by DaveF1006 in my post

JJ

[peter-ludemann]

This is what I did to report Canadian pension income from 2 sources (a private defined benefit pension and Canada Pension Plan) plus US SSA pension income. For both cases, I received an NR4 from Canada [as an aside, it would be really nice if the US standardized its 1099 forms the way Canada has ... it's a bit of a nightmare reading through the 1099 forms from Vanguard, Schwab, Fidelity]. I also have some Canadian RIF disbursements, which TurboTax sort of handles, but not well (I used to do this by creating my own 1099-R; this year, there's a special section but it's confusing because the numbers don't show up the same way that 1099-R numbers do).

I used TurboTax Deluxe desktop (AFAIK, the online version doesn't allow access to the forms).

For the private pension, I simply added the amount as "miscellaneous income" with a comment and it ended up on Schedule 1 Line z (sorry, I don't remember what question I answered to have this happen). In the past, I had tried to create a 1099-MISC but that ended in tears (I forget the details).

For the CPP, which is covered by the tax treaty, I used the "Social Security Benefits Worksheet", clicked on item A (total net benefits from Box 5 of all SSA-1099 forms) and entered my SSA-1099 and CPP information (after doing currency conversions).

So, that left claiming the foreign tax credit, which is an extremely confusing form and TurboTax more-or-less replicates the confusion. Fortunately, I have only 3 sources of foreign income (one of them being "RIC" from investments); it would have been much worse if I had had 4 or more sources.

For this, I opened the "Foreign Tax Credit Computation Worksheet" and entered the numbers (using the pop-up "supporting details" to enter all the sources). One complication is that one of my 1099-DIVs is a single stock for a foreign company, and Fidelity combined it on the 1099-DIV with my other investments ... for that, I adjusted the 1099-DIV and created a separate 1099-DIV for the foreign stock. (The reason for doing this is that you need to report all the foreign income for each country if you want to maximize the tax credit)

It would *really* help if every time TurboTax asked for federal or state tax paid, they would allow entering foreign tax paid, even if the IRS form doesn't collect that information. I set up a separate Google spreadsheet to keep track of all the items and used two laptops to go back and forth between TurboTax, the spreadsheet, and my 1099 an NR4 documents (the spreadsheet also helped me record my currency conversions). (I keep scanned tax documents in a Google Drive folder, which lets me scan  the PDFs for details such as "foreign", which each 1099 reports in a different way) It would also help if TurboTax would allow opening a "details" window when entering numbers from the Step-by-Step ... AFAICT, that can only be done when editing a form, and you have to be careful to get to the right form for the source of information (e.g., use the worksheet, not the form, if the worksheet exists). 

HTH

[juham2013]

CLARIFICATION

I am using the term "pension" for withdrawing monthly Social Security that I have earned in my native country, before emigrating to the U.S. and becoming a citizen of the USS, working both in the private sector and the public sector (government).   The Social Security payments from my employment in the public sector in the foreign country can only be taxed by the IRS as per the Tax Treaty between the U.S. and the foreign country.  This "pension" is not a private pension plan or an IRA whose value fluctuates with the market so, essentially, it is exactly the same as the Social Security payments I am getting here in the U.S.  The monthly amount can only vary if the foreign country agrees that annual living expenses have risen due to inflation,  again, the same way that US Social Security payments can increase on account of inflation,

Cheers,

JJ

[peter-ludemann]

For my foreign pension (from the government, and taxed the same in the US, per the Tax Treaty), I simply add it to the "social security benefits worksheet" (and the "Supporting details" pop-up helps me keep track of what I've done. If the tax treaty with your country requires that each country treat the foreign country's pension like their own, this seems to work (at least, I didn't have a problem last year); if there's a different tax treatment, I'm not sure what to do (you'd probably have to fiddle with the "taxable social security benefits" on line 18 of the "social security benefits worksheet".

[SharonD007]

You will report your foreign pension in TurboTax by creating substitute 1099-Rs (Form 4852).  Complete a Form 1099-R as if you received the correct form. Enter as much info about the payer as you can, including name, address, and the amounts for 2025. Then complete the info for the substitute form.  Enter the foreign pension gross amount in USD in Box 1 and taxable amount in Box 2a, in Box 7 use Code 7 for normal distribution, use 99-0999999 for the EIN. 

 Follow the steps below:

1. Open your return
2. Select Wages & Income
3. Scroll down to Retirement Plans and Social Security
4. Select Start by IRA, 401(k), Pension Plan Withdrawals (1099-R)
5. Choose to add a 1099-R
6. Select Enter a different way and Type it in myself or Select Financial Institution or other provider and Continue (This depends on if it’s the first time that you entered retirement income or if you have already gone through entering retirement)
7. Select the down arrow at Address Type and select Foreign Address
8. Enter your information as instructed above. 
9. Check the box I need to prepare a substitute 1099-R on the screen “Do any of these situations apply to you?”
10.  TurboTax will guide you through creating Form 4852 for the substitute 1099-R.

Refer to the TurboTax Help article  Where do I enter my 1099-R? for more details.

@juham2013 

[juham2013]

Hi,

According to the tax treaty the social security payments ("pension") from my employment in the public sector in my native country is taxable by IRS only.  The social security payments from my employment in the private sector in my native country is taxable by my native country only.

Cheers,

JJ

[juham2013]

Hi,

The problem is that the social security payments ("pension") I am getting are not anything like IRA, 401(k), Pension Plan Withdrawals (1099-R).   So, creating a substitute 1099-R would seem not the correct way.

JJ