Retirement/Pension Ireland

[KHM2]

I migrated from Ireland in 2013 to the USA.  I left behind a small retirement account that I could not transfer with me.  The retirement account was a company pension plan where both made contributions (company matched).  I did not contribute to it after leaving Ireland and it ebbed and flowed with the stock markets.  I’ve been a US citizen for a few years and living in the US since 2013.

Last year I decided to close out the account as the opportunity arose and I took a small taxable lump-sum payment while purchasing a very small annuity in Ireland with the balance.

As I am doing my 2021 tax-return I am wondering how to report this.  I am trying to avoid having to pay tax on the lump-sum if possible or at least if I can claim a foreign tax credit or something to offset the taxes paid.

Seems very difficult to find anything in layman’s terms that explains or provides guidance on what to do, even on the irs website.

Can any experts out there give any input?  My other option is to speak to a tax advisor familiar with International tax situations like mine, but keeping that as a last resort for the minute.

[LoganathanB]

You will be able to claim credit for the taxes you paid in Ireland. You will have to fill out Foreign tax credit form 1116.

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 2021 or have credits to use from a prior year?
4. Follow the instructions to get the credit or deduction

Foreign Tax Credit 1116

[KHM2]

Thanks - I guess i need to wait for the form to be available to check this out.

[KHM2]

1. Make sure you've entered all your foreign income

where is this located or the best location for my situation?

[ErnieS0]

Enter your Irish pension in Retirement Plans and Social Security. You will need to create a substitute Form 1099-R because you have a foreign pension.

To get there:

• Type "1099-r" in Search in the upper right
• Select "Jump to 1099-r"
• Say YES to Did you get a 1099-R in 2021?
• Continue past Get ready to be impressed
• On Let's import your tax info, chose the bottom option Change how I enter my form
• On How to you want to enter your 1099-R? click Type it in myself
• On Who gave you a 1099-R? select Financial institution or other provider (1099-R)
• Enter your 1099-R provider's info. For the Payer's TIN users have had success with 00-0000000 or 99-0999999
• On Enter your 1099-R details use 7 as the Box 7 Distribution code
• Do not check the IRA box. This is a qualified pension.
• On Do any of these situations apply to you? check I need to file a substitute W-2 and complete the information.

[KHM2]

thanks for the detailed response - that is really great!

couple things - I guess the last part is file a substitute 1099-r and not a w-2, also when filling out the details should i put in the tax paid in Ireland as federal tax or just leave it all blank except for the distribution and taxable amounts which are the same, then use the form 1116 for the tax credit?

[LoganathanB]

Yes, 1099-R

Use form 1116 to claim Foreign tax credit.