I am paid retirement benefits from Nicaragua which my sister collects and uses there. I do not see a tax treaty between US and Nicaragua so I'm not sure how to report this. I have found a few solutions using a 1099-R but those were for countries with treaties. Also, do you convert the payments to USD each month or just as of 12/31 exchange rate? Any help would be greatly appreciated. Thank you.
The issue with reporting foreign pension income under a 1099-R is the lack of a Payor ID, which generates Efile errors.
It is much easier to report as follows (and the income is taxed the same):
Scroll down the list of Income Topics to Less Common Income > Miscellaneous Income 1099-A, 1099-C, choose Start or Update.
Then scroll down the list of Miscellaneous Income Topics to 'Other Reportable Income'.
Enter 'Foreign Pension' and the Amount (screenshot).
If you paid any tax on your Foreign Pension, you can claim a Foreign Tax Credit.
The issue with reporting foreign pension income under a 1099-R is the lack of a Payor ID, which generates Efile errors.
It is much easier to report as follows (and the income is taxed the same):
Scroll down the list of Income Topics to Less Common Income > Miscellaneous Income 1099-A, 1099-C, choose Start or Update.
Then scroll down the list of Miscellaneous Income Topics to 'Other Reportable Income'.
Enter 'Foreign Pension' and the Amount (screenshot).
If you paid any tax on your Foreign Pension, you can claim a Foreign Tax Credit.