Where to enter foreign pension income and foreign tax credits?

[DaveF1006]

It depends. i am not aware of any state that does not tax miscellaneous income. All  states that have a state income tax will tax all income unless the income is specifically excluded.

@BernardOng 

[fjk56]

Thanks for your input and Bernard's three options that he offered. I recently retired and used option No.1 for the first time filing my 2022 return and my e-filing was accepted. I believe I will use option No.3 next year unless TurboTax makes changes to their program.

[ParkNYC]

It's January 2024 and this issue still hasn't been solved by Intuit. For years I've been using form 1099-R to report my wife's foreign pension income without any problems. I was using nine digits 11-1111111 as payers FIN and I had no problems so far. Actually, this method was recommended by many Turbo Tax users. This year TT wouldn't allow me to do that, I'm getting an error which would prevent e-filing for sure. I'd like to use 1099-R because the program automatically would transfer this properly as a retirement income to our New York state income tax return. NYS allows $20,000 pension and annuity income exclusion. How can we fix this error without creating any other income new entries or new forms? I also think it's time for Intuit to make a generic 1099-R form for all those foreign pension payers without EIN. There are many people getting foreign retirement income. Please fix this already!!!!

[reddragon1148]

100% support your request to TT!!  I am getting a spousal survivor pension from Germany and don't have any idea how I am going to report this to the IRS and Colorado.

[Kosetife]

I agree 100%. 

[Kosetife]

I have been following all the exchange messages regarding how to report foreign pension for tax purposes. There should not be any doubt that at Federal level the most simple way to report it, and in my view the correct one, is to report it as “other income” meaning to say as “ miscellaneous”. Particularly it must be reported on 1040 Federal Tax Return  line 8 under “ other income” indicating clearly that it’s a “ Foreign Pension from xxx”.  In xxx write the country. If you want you can attach an addendum with your foreign payor tax identification, if any. All payor have a tax identification in their country.

Regarding those that live in States that provide “pension exclusion” that won’t be allowed if the foreign pension is reported as”miscellaneous”, report it directly on the 1040 State Tax Return line available for “retirement, pension…” and the like, because “ pensions are pensions, doesn’t  matter where they come from” and must be reported as pension. This is the response I was told in person by  NJ Division of Taxation Information Center. Furthermore, I got from the same State Taxation Regulatory Services the assertion in writing that “foreign source pension payments may be allowed exclusion if the beneficiary is 62 or older and his/her total household income is 150,000.00 or less”.

This shows, at least for those residing in NJ, that pensions can be reported as pension in the same line than US source pension, and consequently is not compulsory to report it as miscellaneous.

I do hope this helps as a reference.

[BernardOng]

Just so I understand this correctly, for NJ state, in situations where income >150K, there will be no pension exclusion applied, and as such, foreign pension entered in the Miscellaneous > Other Income section will be taxed on both the federal and NJ state level as expected.

[DaveF1006]

Yes, this is correct. 

@BernardOng 

[Kosetife]

Yes, this is why new Jerseyans with retirement / pension above 150 k report it as “other income”at federal and State levels too because are taxed at both levels anyway .

Those new jerseans with retirements/ pensions below 150 k report it as “retirement / pension” at State level on Line 20a) of NJ 1040 Tax Return Form to get the exclusion allowed by law.

[ParkNYC]

I'm not in NJ, I'm in NY, I file IT-201 where taxable pension (incl. foreign) flows from form 1099-R to line 10 and then automatically deducts up to 20K (pension exclusion) on line 29. That's why is so important for me to file 1099-R so i don't have to mess with other income. I don't think it's possible to manually change line 29 on IT-201.

In NJ the threshold amount is not pension > 150K , but income.  You can exclude some pension income if your total income for the entire year was $150,000 or less.  You can check it here:

https://www.nj.gov/treasury/taxation/njit7.shtml

[Kosetife]

You are correct. It seems that with the IT 201 everything flows easily which is not the case of our 1040 NJ Tax Return Form.

As a matter of fact, we have two lines on such Form: Line 20a) for pension, annuities   IRA and the like and Line 27 for other incomes.

The instruction for Line 20a) indicating the incomes to be reported doesn’t mention specifically nothing regarding foreign pensions. This doesn’t mean of course that foreign pension should not be reported on Line 20a) but arises the doubt leaving  the option to report it on Line 27 reserved for “other income” that is for any other income for which a place to report it cannot be found in such Form. So, there is room for interpretation.

The 1040 NJ Tax Return Instructions determine that retirements exclusions are related to the amount reported on Line 20a) if the taxpayer is 63 or older and his/ her income is below 150 k. 
So, if a foreign pension is reported on Line 27 no exclusion is allowed .

Taking into account that NJ Taxation Regulatory Services Branch informed me in writing that :

“While the foreign source payments are considered taxable income, the income still may be excludable under the pension exclusion. Generally, a taxpayer can exclude all or part of the pension income reported when meeting the following conditions: 

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older or disabled as defined by Social Security guidelines on the last day of the tax year (December 31 for calendar year filers); and 
• Your total income for the entire year was $150,000 or less”

I assume that those new Jearseans that meet those two condition legally can report their foreign pensions on Line 20a) in order to get the exclusion .

Please let me know your comments .

[Xian2]

thanks everybody for this informative thread

I know that Canadian and German social security is treated exactly as SSA income on the federal level

the discussion for NJ state has been enlightening, does anybody know how German social security income would be handled on NY state tax  (ie SSA income is not taxable)

thanks

[DaveF1006]

in reviewing the NJ Tax Guide fir retirees,  I do not see any restrictions for Foreign Pensions thus the NJ Taxation Regulatory Services Branch is correct. Keep in mind, it is mentioned that it may be excluded if certain conditions apply. 

In your instance, you would not report this on line 27 as this would be considered other income.

@Kosetife 

[Kosetife]

Thank you David. You have been very helpful. I started recently getting involved with taxes related matters when I faced contradictions among accountants, tax preparers related specifically yo foreign pensions .

As a matter of fact I arrived to the US when I was already retired in Argentina just less than 4 years ago to be close to my family (already grown children and grandchildren) that live in NJ.

My wife and I live on our foreign pension and of course we file income tax . I started facing contradictions from tax preparers at a point that the first time I filed my State tax reporting my foreign pension on Line 20a) but then my tax preparer suggested to report it on Line 27 as “other income” and I lost the exclusion.

So, being myself a retired  accountant in my country I decided to get personally involved and I simply started to study not only IRS regulation related to foreign pensions but also NJ ones. I start contacting also the taxation agencies and well to have trustable information.

This is why I get the confirmation from NJ Taxation Regulatory Services Branch that foreign source pension payment may have exclusion if certain condition are met by the taxpayer and I realized that my tax preparer made me make a mistake.

Now I have to file an amendment to my 2022 NJ Tax Return in order to solve the matter. 

I do hope that all this information exchange will help other new Jerseyans that face the same regarding their foreign pensions. 

[ParkNYC]

I do believe if your foreign pension is a retirement pension related to work your performed in foreign country for your employer, it's paid monthly and you're 62 you can exclude part of the pension or whole on your state tax return. You'd still have to pay federal tax. NY allows total 20K exclusion, NJ was already covered.

I wonder if Inuit developers read those comments.

GIVE US A GENERIC 1099-R worksheet so we can properly file our taxes!!!