Where to enter foreign pension income and foreign tax credits?

[papayas]

Multiple discussions in this forum and accurately describing what worked one year does not work any more. To summarize the discussions.

1) Create a subsitute  1099R and and attendant form 4582. The problem here is that without an EIN Efile may be rejected. Workarounds like all 11-1111111 are flagged as an error in turbotax and may require manual filing. Manual filing is really a less than satisfactory solution. I have noted all 7ss or 5s might work and I have used 11-1111111 in other years and Efile worked.

2) Claim the pension in come as miscellaneous income (interest or other) This is problematic particularly in states that do not tax pension income. The income shows as earned income not Pension Income.

I wonder if there might be third option at least for Canadian pension. You could claim the pension under Canadian Registered  Pension Income, which has a specific tax category. My interpretation is that a Registered Pension Plan is treated identically as RRIF or RRSP. 15% Tax is withheld, distributions are taxable as received and US/Canadian Tax treaty applies. So for those who have a foreign Canadian Pension (NOT Canada Pension Plan which is reported as Social Security) this option may work. Not sure if changing the method from other years may raise red flags. 

Since this issue has been floating around for years I am not  optimistic about a resolution. There must be millions of people who have foreign pension and sending unecessary manual filings to an overwhelmed IRS does not seem like the answers. Particularly when the IRS 4582 instructions indicate leave TIN or EIN blank if unknown.

Note all options require you to file for foreign tax credit. 

[AmyC]

The 8833 is not required for a pension under tax treaty benefits. Which means you have more lee-way with entering the information as long as it is clearly in the list of exceptions. Your option 1 no longer works. Your option 2 works and then work in the state section to correct the tax treatment. Option 3 would work if you had the same treaty benefits for that section.

Option 4 -please see my post here.

Claiming Tax Treaty Benefits

The payee does not have to file Form 8833 for any of the following situations:

1. The payee can claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate.
2. The payee can claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants.
3. The payee can claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.
4. The payee is a partner in a partnership, or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return.
5. The payments or items of income that are otherwise required to be disclosed total no more than $10,000.

For recent changes to the requirements for filing Form 8833, refer to the instructions attached to the Form 8833.

@papayas 

[papayas]

Thanks for your answer and Clarification.  I will file under Turbo Tax Category 

 "Canadian Registered Pension Income"  (option 3 above). This seems like the best place for those receiving a Canadian Pension under treaty.

It would be nice if Turbo Tax definition would expand the definition as it talks about RRIF and RRSP.

However RS publication 597  states

A pension includes any payment under a pension or other retirement arrangement, Armed Forces retirement pay, war veterans pensions and allowances, and payments under a sickness, accident, or disability plan. It includes pensions paid by private employers and the government for services rendered.

Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada.

So it would be helpful for Turbo Tax to expand this definition going forward 

I note following the process on your link "option 4" Turbo tax flags the missing EIN as an error. So I doubt I can efile 

[DaveF1006]

There is a better way for you to report this so you may efile, which is perfectly acceptable.

, 

1. Log into your account
2. Select Wages and income>other income
3. Miscellaneous Income, 1099-A, 1099>start
4. Scroll to the bottom of the page to Other Reportable Income
5. Other taxable income, answer yes
6. Then give a brief description of the income and the amount paid.  For the description, put Canadian Registered Pension Income and the amount of the income.

[Fredandirma]

Brilliant! 99-0999999 worked for me too! THANKS!

[Nan3]

My husband and I have one pension and two social security accounts from the UK.  In previous years I filed it on 1099-R with 11-1111111 in the TIN line.  This year it will not accept that entry.  Like the person who first asked this question, we also will owe more state tax if we enter it as miscellaneous income.  I spoke to a TT expert this morning who suggested entering it as foreign income, but that does not work, as I have to tell what UK form I got the information from.  I think the foreign income category is for people who are still working.

Not sure how to fix this, as I can't even get past the federal part of TT without that TIN number for the pensions.

[AmyC]

Are you using windows or desktop? Did you try using all 9's like the post above? Try that and if it doesn't work, reply back as there are more options. On the desktop, we can manipulate the numbers to match  the correct answers while reporting the income elsewhere, it does void the accuracy warranty though.

@Nan3  

[Nan3]

Amy,

I have tried all ones, all nines, all zeroes, and leaving the space blank.  None of them gets past the Turbotax checking system.  I have been told about some of the other workarounds, like putting the money on line 21, but that will not get me the State exclusion on pensions.  I was also told to enter it as foreign income, but the options that have to be ticked in that section do not apply.

According to the instructions for form 1040 SR, foreign pensions go online 5a and 5b, which is the Pension section.  TurboTax seems to have a problem on this issue.  In previous years putting in all ones worked, but not this year.  Most of the community chats I have found on this issue are dated in previous year.

Hope you can help.

Nancy

[Fredandirma]

Nancy, had same issue: try 99-0999999 instead. Worked for me! I agree it's absurd that TT hasn't mentioned it anywhere!

[Nan3]

Thanks.  So far, that seems to be working.  Crazy, I agree.  You would think TT would let their tax experts know that.  There have to be plenty of us in this situation.

[DaveF1006]

This solution hasn't worked for everybody so we are reluctant to give this advice. We are glad however this has worked out for you.

@Fredandirma 

@Nan3  

[Kosetife]

Glad to know that with 99-09999999 works for some of you. Another way is to report the foreign pension on the line that works for you 5a) /5b) or 21 at federal level. Then if you live in a State that allows exclusion on pension, file your State Tax Return separately online or even manually and send it by mail reporting your foreign pension on the your State Tax Return Line referred to pensions . Am I wrong?

[Sheila29]

I tried entering my foreign pension as suggested in the feed but for Turbo 2022 returns non worked. Turbo keeps asking for Payor EIN . Nine digit 0’s or 9’s no longer work. Is there an updated way of entering Forein Pensions?

[JamesG1]

In TurboTax Online, report the foreign pension as follows:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Less Common Income and click on the dropdown menu.
• To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
• To the right of Other reportable income, click the Start / Revisit button.
• At the screen Any Other Taxable Income, click Yes.
• At the screen Other Taxable Income, enter a description and the amount.
• Click Continue. 

The entry will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

@Sheila29 

[Fredandirma]

Thanks for your reply Sheila.

I entered it as a 1099-R (it's a pension, so looks like a distribution) and filled in a "substitute 1099-R", which automatically generated the 4285 form which is nothing more than a free-format explanation. For the Federal ID, the dummy code 99-0999999 after googling and was accepted by Turbo Tax (they are HORRIBLE in this field!).

IRS accepted it 3 weeks ago and later I heard that quite some friends do the same (substitute 1099-R with 4285 and dummy Federal ID. 

But I assume that your solution will be correct too: End result is that you don't hide foreign income.

Thanks again!