How is foreign pension reported with no 1099 form?

[peter-ludemann]

So, I *think* what you do is enter the "taxable by the IRS" on the "social security benefits worksheet" (this presumes that the 85% taxable rule applies, per the tax treaty). For the other income, you could either do it as "other income" (line z) or make a 1099-R. I recall trying the 1099-R but had some trouble; I can't recall what the problem was ... it might be nothing more than fiddling with the foreign tax credit worksheet, which you'd have to do anyway.

Don't forget to include both your pensions as foreign sourced on the 1116 Comp Wks, to get the maximum tax credit.

BTW, at least in my case, the tax treaty was pretty easy to read and I only needed to look at a few paragraphs.

[peter-ludemann]

AFAIK, the 1099-R income is handled like any other non-dividend/non-capital-gains income, so you probably can use it. But reporting on line z works for me.

BTW, I was audited once for some other deductions I took - IRS wanted documentation. It was a fairly painless experience, except for the shock of getting the "you are being audited" letter. I don't expect to be audited for my pensions - after all, I'm reporting more income than is on the SSA-1099s.

[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.

@peter-ludemann 

[juham2013]

Does anyone have contacts or recommendations on a Tax Attorney in the Dallas-Fort Worth area?  Someone who is versed in international tax scenarios for seniors.   Or a CPA who is knowledgeable in international tax situations?   Problem is that I still like to file tax returns electronically as it is much more convenient and faster.

JJ

[juham2013]

Unfortunately, that won't work.  There are no "distributions."  This "pension" is almost identical to the Social Security benefits I receive here in the U.S.

JJ

[TexasTea]

@juham2013 I'm in DFW, retired after working roughly half my career in Canada, and half in the US.  I receive foreign private and public pensions (from Canada).   I have hired international tax professionals to do my returns in the past, but now I do them myself, and for the most part it isn't too difficult getting Form 1116 sorted out if you only have common types of income like wages, pensions, dividends and interest.  

If you want to find professional help, I'd suggest that you broaden your geographic search beyond DFW.  Even though it's nice to meet people face to face, I think it's even more important to find a tax preparer who is intimately familiar with your particular home country's tax situation, and you may not find that in DFW.   I hired Canada/USA cross-border specialists who already knew every nuance of the Canada/US tax treaty, and all about the types of private and public pensions and social security payments that Canadians get, and that made everything really easy to deal with.   I don't know what country your foreign income is from, but perhaps a Google search will turn up similar specialists for your situation.   You might find you are more comfortable working with a specialist like that rather than a generalist based in DFW, even if you can't meet them face to face.  

[TexasTea]

@juham2013 in an earlier post you said:

"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."

The answer is no, this isn't "double taxation".  There may be a misconception here about how the tax treaty works:  when it says for example that a foreign country has the right to tax the foreign pension, it doesn't mean that the US ignores that income.   It just means that the foreign country taxes it FIRST.  But if the foreign country taxes the income at a lower rate than you would have paid on the same income in the US, then the IRS will collect additional tax such that overall you pay at least as much tax on foreign-sourced income as you would if it were domestically sourced.

It's hard to come up with simple examples, but I'll try:

Say you have $1000 foreign pension that was taxed at 15% by the foreign government, so they collected $150.

Say under US tax law, when combined with all your other worldwide income, the IRS determines that your average tax rate on this type of income in the US is 20%, or $200.

So the US charges you the $200 in tax, but with Form 1116 they allow you to claim a credit for the $150 you already paid to foreign government, so the net result is you pay $50 to the US, $150 to the foreign government, so $200 in total.

That may feel like double taxation, but really it isn't: the $1000 has only been taxed once, at the higher of the two tax rates.  And that is the usual outcome of these types of foreign tax credit calculations:  you always end up paying the higher of the two tax rates assessed by the two countries.    

[juham2013]

Thanks "TexasTea"!

JJ

[TexasTea]

@juham2013  at the risk of adding to the confusion, my example above was based on how a foreign private pension would generally be treated.  After reading your posts more closely I can see you also have some foreign "social security" equivalent income, in which case your tax treaty may allow you to exclude it completely from your US tax calculation.   I saw a post dated March 7, 2025 7:04 AM in a thread "Form 1116" where DaveF1006 gave you instructions how to claim treaty benefits to avoid double taxation in that situation.

[user17760516770]

I am on Turbotax desktop (MAC) and I can not see how to create a  substitute 1099-R for foreign pensions. I also need to add a foreign pension which has SSA status -  Can you please give me the step by step process for he desktop? Your previous answer referred to the online turbotax version but I am on desktop 2025.

[DaveF1006]

The reporting does not vary between desktop (MAC) and online. Here is how to report. 

1. Open Federal Taxes: Click the Federal Taxes tab (or Personal tab depending on your specific Desktop version) and select Wages & Income. 
2. Navigate to Retirement: Scroll down to the Retirement Plans and Social Security section. Click Start or Update next to IRA, 401(k), Pension Plan Withdrawals (1099-R).
3. Initial Screen: If you’ve already entered other 1099-Rs, click Add Another 1099-R.
4. he "Import" Skip: On the screen asking how you want to enter your 1099-R, select "I'll type it in myself."
5. Identify the Payer: Choose Financial Institution or Other Provider and click Continue.

• The Dummy Data Trick: Since you don’t have a real 1099-R:
• Payer's EIN: Enter 99-0999999 (this is a common workaround for foreign entities). There are other variations such as 11-1111111, 22-2222222 or 99-0999999. 

Click Continue through the subsequent screens. You will eventually reach a screen titled "Do any of these situations apply to you?" Check the box: "I need to prepare a substitute 1099-R."   

Here are some other tips on how to report this on your return

• Payer's Address: Switch the Address Type dropdown from "U.S. Address" to "Foreign Address" and enter the foreign details.
• Amounts: Enter the USD equivalent of your gross distribution in Box 1 and the taxable amount in Box 2a.
• Box 7: Use Code 7 (Normal Distribution) unless you are under age 59½.