Hi Park NYC and others members of this chat.
1.- Coming back on foreign pension treatment at Federal and State levels and after the excellent messages we exchanged already and summarizing, I think the following but I would appreciate to have your view on it.
2.- Anybody receiving Social Security Pensión and any other pension from a country that have no a bilateral agreement on pensions tax treatment with the US, the foreign pension is 100 taxed , even if it’s a Social Security pensión. . No doubt on it.
3.- Regarding particularly to New Jersey State, it does not tax US SS income, but foreign ones are taxable anyway . The written explanation given by NJ Taxation Regulatory Services Branch is the following:
“Items excludable from New Jersey gross income tax are set forth at 54A:6-2 to 54A:6-9. N.J.S.A. 54A:6-1. In relevant part, “All payments received under the Federal Social Security Act, whether they be regularly monthly benefits or lump sum death benefits” are excludable. N.J.S.A. 54A:6-2. As such, foreign source pension payments are considered taxable income for these purposes because the payment was not made under the Federal Social Security Act.
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.
When you and your spouse/civil union partner file a joint return and only one of you is 62 or older or disabled, you can still claim the maximum pension exclusion. However, you can exclude only the pension, annuity, or IRA withdrawal of the qualified spouse/civil union partner.
If you qualify, you can claim the lesser of your actual taxable pension income or the maximum pension exclusion amount for your filing status and gross income”
4.- With this written statement that I received from NJ Taxation Authority, there shouldn’t be doubt that: (i) at Federal level all foreign pensions are taxable unless a bilateral agreement states otherwise and (ii) at State level -and as far as NJ State is concern- “while foreign source pension payment are considered taxable income, the income may be excludable under the pension exclusion” ( this is the wording used by the NJ informant tax agency) . It’s an essential assertion. Isn’t it?.
5.- The exclusion will be allowed if the taxpayer is 62 or older and if his/her total income is 150 k or lower.
6.- I think that for New Jerseyans is clear. It would be important if Turbo Tax could offer a Generic 1009 R otherwise the only option will be to override the system and report the foreign source pension payment directly on the State Tax Return Form Line referred to pensions. For NJ 1040 Tax Return Form the line should be Line 20a) and NOT Line 27 referred to other income or miscellaneous.
Comments from anybody participating in this chat will help us enriching our understanding on how to report foreign pension for tax purposes .
