How to enter a Foreign Penson received in tax year 2024

[Russ G]

My wife receives a Pension from Germany for a period that she worked prior to becoming a US citizen.   first question is it reportable income for US taxes?  Second if so (I believe it is)  how do I report it on the current  version (tax year 2024) of TurboTax?

[Mike9241]

per US-Germany Tax treaty

ARTICLE 18
Pensions, Annuities, Alimony, and Child Support
1. Subject to the provisions of Article 19 (Government Service; Social Security). pensions and
other similar remuneration derived and beneficially owned by a resident of a Contracting State in
consideration of past employment shall be taxable only in that State.
2. Subject to the provisions of Article 19 (Government Service; Social Security), annuities derived
and beneficially owned by a resident of a Contracting State shall be taxable only in that State. The term
"annuities" as used in this paragraph means a stated sum paid periodically at stated times during a
specified number of years, under an obligation to make the payment in return for adequate and full
consideration (other than services rendered).
3. Alimony paid by a resident of a Contracting State and deductible there to a resident of the other
Contracting State shall be taxable only in that other State. The term "alimony" as used in this Article
means periodic payment (made pursuant to a written separation agreement or a decree of divorce,
separate maintenance, or compulsory support) that are taxable to the recipient under the laws of the
State of which he is a resident.
4. Nondeductible alimony, and periodic payment for the support of a minor child (made pursuant to
a written separation agreement or a decree of divorce, separate maintenance, or compulsory support),
paid by a resident of a Contracting State to a resident of the other Contracting State shall be taxable
only in the first-mentioned State

Explanation of treaty provisions

ARTICLE 18
Pensions, Annuities, Alimony and Child Support
This Article deals with the taxation of private (i.e., non-government) pensions and
annuities, alimony payments and child support payments.
Paragraph 1 provides that private pensions and other similar remuneration derived and
beneficially owned by a resident of a Contracting State in consideration of past employment are
taxable only in the State of residence of the recipient. This rule applies to both periodic and
lump-sum payments. Treatment of such pensions under the 1954 Convention is essentially the
same as under this Convention. The rules of this Article do not apply to items of income which
are dealt within Article 19 (Government Service; Social Security), including pensions in respect
of government service, or as compensation for injury or damage sustained in hostilities, and
social security benefits

SUMMARY

unless it is a German gov't pension for services it is taxable in the US. Unless your spouse received the pension in US $ you'll have to convert to US $

https://www.irs.gov/individuals/international-taxpayers/foreign-currency-and-currency-exchange-rates 

REPORTING

you can use form 1099-R try all 9's for EIN. if that doesn't work list it under other income schedule 1 line 2z

[Russ G]

Thanks for the feedback.  Of course the treaties really doesn't make sense to me.   I looked up "German gov't pension for services"  and it says "A "German government pension for services in Germany" refers to the mandatory "public retirement insurance" system, also known as "gesetzliche Rentenversicherung" (GRV), where both employers and employees contribute a percentage of their salary to receive a pension upon reaching retirement age after working in Germany for a qualifying period; essentially, it's the primary state pension provided by the German government to its citizens who have worked within the country. "   This is the type of pension that my wife receives; the I way read your reply the pension does not need to be reported as taxable income.  Is that correct?

[AmyC · Accepted solution]

Yes, the treaty allows for it to be taxable in Germany. This means you should report the income and then subtract it back out using the treaty as the reason for the subtraction.

Normally, retirement income is entered on 1099-R Since you are adding it and subtracting it together, I like the idea of putting them in the same place on the return.

Add the income, follow these steps:

you can move the income to to Other Income without it affecting other parts of your return, that would be the easiest.

To enter:

1. You would go to personal income, 
2. scroll to the bottom to misc income, 
3. start, 
4. scroll to the bottom again, 
5. other reportable income, 
6. start.
7. enter USD amount and description.

Remove the income:

follow the steps above but change the description to exempt under German tax treaty.