Where to enter"Retirement Benefit benefit (contribution) made by Foreign employer

[TMM322]

Living abroad and qualify for the foreign income exclusion. Do not qualify for an IRA or 401k - which foreign employer does not provide.

Foreign employer does provide a "Retirement Benefit payment" . which goes into a taxable account

Where is this Retirement benefit payment (contribution by employer)entered?   Is it just added to salary?  

Thank you

[pk]

@TMM322 ,  your post is so void of details that I don't know how to begin to answer this question.

(a) Are you a US person ( citizen/GreenCard)?

(b) Which country is your tax home? -- need to review  the tax treaty ( if any)

(c) Assuming that your employer is a local entity, is this "employer contribution" govt. required  item or just employer's good deed  ( benefit package)?   Whether required or not by the govt., is there any law that defines this benefit, how it is held ( a govt. account, a trust, etc. etc. ), how is it governed etc. ?  What are the rules for distribution ?  Is it taxed when contributed or what ?   Is the distribution taxed  and if so under what rules ?

(d) What are your plans for this account  when you come back to the US ?  

(e) Are you also contributing to SSA while abroad ?

AS you can see I need a lot of info before I can help you .  So please answer my Qs.  If you do not wish to answer on this board ( privacy concerns ), you can always PM me   ( that does not show up on this board ) --- but please NO PII ( Personally Identifiable Information )-- that way I would not know who you are  but will know the situation and answer based on that ONLY !

I will circle back once I hear from you--yes? 

[TMM322]

Thank you!  I am actually asking for my adult child. 

a)  She is U.S citizen  

b)  Her Legal permanent residence is New York State, living in Dubai working for Dubai based organization. There is no income tax there.

c)  The Retirement Benefit Payment is an employer's good deed - part of the benefit package.  The payment goes into a brokerage account in the employee's name - it is not an IRA or 401K -and not tax deferred.  I would say taxed  when contributed BUT - since all her incomes qualifies for the Foreign Income Exclusion, she does not pay any U.S. Federal income tax.  She receives a 1099 each year on the dividends and income generated by the account.   It is my understanding when shares are sold, tax is payable on any increase in the share's value. 

d)  She plans to use funds for her retirement.  

e) She is not contributing to Social Security - Foreign employer does not pay into Social Security - and her earned income qualifies for Foreign Income Exclusion - so as I understand it, her only taxable income is the 1099s she receives on her interest and dividends (From the retirement account and elsewhere). 

I would GUESS the retirement benefit payment should be added to her basic salary and total entered under foreign earned income.   TurboTax does have places to enter housing provided by employer, overseas differential, home leave, etc. - but I don't see a place to enter the retirement benefit payment made by the employer.

Thank you !

[pk]

@TMM322  thank you for your complete response to my questions.  What I get thereby :

1. A US person having a foreign tax home ( Dubai) and working for a local entity.

2. Having met the Physical Presence Test ( 330 days away from US  in a continuous 12 month test period), she is eligible to exclude the  foreign income that falls both within the test period and the tax year under consideration. --- hope this makes sense.

3. Because ( per your explanation), the taxpayer is getting part of her remuneration as wages and the rest as  a deposit into an investment account ( shares of the entity ? ), her total remuneration is to be included as Foreign Earned Income  ( So it is wages plus this extra bit as wages  + housing + COLA etc. etc. ) --- does this make sense ?

4. Absent a totalization agreement between US SSA and the local govt. , the taxpayer is subject to SECA  ( same as FICA but at the full 15.3 % because there is no employer participation).  Use Schedule-SE.  Just make sure that the Schedule-SE has the correct total remuneration entered ( it may  not flow from form 2555 that you use for  Foreign Earned income Exclusion ).  For many the easiest way is to use a Schedule- C  --  self-employed --- as the entry point of income and then  ( go to  Foreign Earned Income Exclusion , ) make sure  form 2555 has the same income as Schedule-C.  This will result in auto population of Schedule-SE.  Just be careful that there is no doubling of the income.

5. Since this way the "Extra bit  of income" is being recognized / taxed, the basis of the  stocks is established. Thus when she disposes of these , it will be a simple capital gain and tax thereon.

Does this make sense ?

Is there more I can do for you ?