I'm still in the WS mode and confused by all the suggestions as to how best to report foreign pensions and take credits for foreign withholding. My best analysis after reading numerous posts is:
CPP and OAS
-no foreign tax withheld
- convert to USD
- add amount to US Social Security
- State tax (if any) will calculate correctly
Private Pension for Past Employment
- Canada issues a NR4 form
- monthly payments are subject to 15% withholding by Revenue Canada
- convert income and tax withholding to USD
- create a 1099-R in TT, the reported foreign tax withholding is automatically applied.
- use 99-0999999 and hope it efiles, if not, Snail Mail the return.
- If successfully efiled, then State tax will be calculated correctly
Question
1. When I report the Private Pension as above, TT then shows a Miscellaneous income entry equal to the created 1099-R amount. Is it double reporting? Is the tax withholding automatically applied or do I need to Claim a Foreign Tax Credit?
2. Should I enter the Private Pension instead as if it was an RRSP/RRIF pension as one poster suggested?
3. Is there a better reporting method for Private foreign pensions using TT (disk) ?
4. Is TaxACT simply better for these foreign pension situations?
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It depends. I personally don't recommend using the mock 1099R, with 999's. Some Tax filers had a problem with efiling using this method. I always prefer my clients efile whenever possible. For the private pensions, I recommend filing in the following manner.
Now, to report your foreign withholding on NR4. Go to:
In response to the remainder of your questions, the Turbo Tax disk will not give you a better option to report this. I am not familiar with Tax Act so I do not know how effective it is. The method i suggested should work fine using Turbo Tax.
In response to you first question, it sounds like you may have entered this already a miscellaneous income. I am confused though because the amount should show up as a pension amount in Box 5B in the 1040 if you filed it using all 9's in the EIN. It looks like you are using Turbo Tax online since you asked me if the disk is better so what I would like for you to do is this.
If there is an amount in 5B, go back to the section where you entered the 1099R and delete the entry. You should only have one entry and this should be reflected in line 8 of the 1040 and Schedule 1.
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