Where and how do I Report Foreign UK Employer Pension Full Distribution on 2022 Tax Returns

[AZMom241]

I received a full distribution of UK Employer Pension last year.  Where and how do I report it in 2022 tax returns?  Should I give a breakdown of how I was taxed in UK in the explanation of 1099-R form?  Should I report the taxable income?  VA also requires me to mail the tax return as I have 1099-R form even though I have no tax due for this year.  Should I file tax return for VA as well?

[DaveF1006]

It depends. To clarify, do you have a 1099R issued by your UK Employer Pension administrator? If so, enter this by the doing the following.  

1. Go to federal>wages and income>all income
2. Retirement plans and Social Security>show more 
3. Ira (401K), pension plan Withdrawals(1099R) Start
4. Record the 1099R exactly the way it is listed on the physical copy of the 1099R.

If you don't have a 1099R, you can prepare a mock return as suggested by ReneeM7122 in this Turbo Tax post. in this post, Renee suggests that you prepare the mock return in the following manner in the following manner.

• Use the first three steps above.
• Next screen, Choose your bank or brokerage, select I'll type it in myself
• On the screen Tell Us Which 1099-R You Have,  check the box 
• I need to prepare a substitute 1099-R and follow the prompts. 

If your foreign pension does not have an ID number, you can try entering nine 9s. If errors occur due to this entry, you can enter the pension under Miscellaneous Income. 

1. Go to federal>income and expenses>all income>>show more 
2. Less Common Income> Start
3. Miscellaneous Income,>start
4. Other reportable income>start
5. Next screen asks Any Other Taxable Income>yes
6. The next screen will allow you to report the income with a brief explanation. in this case, you would enter UK pension benefit and then the amount.

This may be a lot of information to digest but I am trying to cover all of the contingencies to make sure you get the best tax advice possible.

[AZMom241]

I do not have 1099R.  
I filled a mock 1099R.  Do I need to add the taxable income or only the gross income under the 1099 Withdrawal ?   Do I need to explain how the U.K. Tax was derived (as I had already paid) or just give the tax paid amount  (without giving details) in the explanation section?

I have also added negative amount of the gross distribution in the miscellaneous income so that I don’t pay double tax (US/UK has double taxation relief). 

I had entered 9x1s instead of 9s in the ID.  

Additionally, even though I don’t owe any tax or paid any tax, my State Tax (VA) in the TurboTax is asking me to submit tax returns because of my 1099R from my Federal Returns.  Should I submit my State Tax Returns?

Thanks.  

[ZhuoliA · Accepted solution]

You need to report the gross distribution as income on your mock 1099-R. You can provide more information regarding the distribution in the explanation section. 

You don't need to add the negative amount of the gross distribution in the miscellaneous income since the double taxation relief is handled through a foreign tax credit or foreign income exclusion. You should report foreign tax paid in the U.K. in the foreign tax credit section by following the steps below:

1) After signing into your account, select Take me to my return

2) At the right upper corner, in the search box , type in foreign tax credit and Enter 

3) Select Jump to foreign tax credit 

4) Start with screen Foreign Taxes and select Continue to follow the prompts.

Please enter nine 9s in the ID to avoid E-file errors. 

You should submit your state tax return to report foreign pension income.

[AZMom241]

Thank you for all your help.  

I followed your instructions.  However, I entered 99-0999999 for my ID and it accepted for Federal e-filing.  
For VA filing I had to send it by USPS.