It's Impossible to Receive Foreign Pension Tax Exclusion Using Turbo Tax Software. This Can Affect Our Tax Refunds.

[ParkNYC]

If you are like myself receiving a retirement pension from a foreign country, you won't be able to file the 1099-R form and properly transfer that information to your state tax return. Because foreign governments don't use or have the US Payer's Federal identification numbers (FIN) the 1099R forms can not be properly filed using Turbo Tax. In previous years Turbo Tax allowed taxpayers to input a generic numbers like 11-1111111 or 99-9999999, but not this year. If you report your pension on form 1040 as Other Income instead of 1099-R and you file a state tax return in a state with pension exclusion, there is a chance you'll be losing $100's or even $1000's of dollars in refunds. To get an exclusion on your state Tax return you'd have to file 1099-R on your Federal return. I spent more than 2 hours talking to the customer service, the person from customer service was very nice and tried to help with that issue, but the Tier 2 support person wasn't helpful at all. I think she didn't understand how serious this issue is to people receiving foreign pensions and filing state taxes. I suggested to provide a generic FIN for such filers like myself or provide a worksheet for state taxes so foreign pension income can be manually reported without filing a form 1099-R (if the IRS insists on using actual FINs). This is a serious issue preventing us from getting full refunds and e-filing our taxes.

Please fix this issue already!

[ThomasM125]

More than likely it is the IRS that will not allow for a generic ID number to be used for a substitute form 1099-R  when you e-file a tax return. I believe most of us have experienced more cumbersome steps we have to take in order to access financial information online in recent years. This may be a reflection of that.

You can enter foreign pension income in TurboTax as though it was reported on a form 1099-R by putting in a substitute 1099-R entry and leaving off the federal ID number. Your pension income will be treated as such on your federal and state tax returns. As a work around, you can enter the pension income as other income on your federal tax return, e-file it and then enter it as a substitute form 1099-R to complete your state return and file it separately. You can also mail in your tax return in most instances.

[ParkNYC]

This is not a solution at all. Even a substitute 1099-R form requires a valid FIN for e-filing.

My both returns have more than 50 pages each, I purchased Turbo tax to e-file my returns not to send paper copies. I've been doing this for years, except in 2023. Why can't Intuit consult this issue with the IRS and ask for generic FIN for situation like this? I believe there are many people with similar issue. Another solution is to provide a worksheet for state filers where a foreign pension deduction could be manually reported without form 1099-R. There are 100s of worksheets for deductions and adjustments available, why don't you provide one for this particular situation? Foreign pensions and retirements should be reported on forms 1099-R and not as Other Income. Many people who live in states with pension exclusion are losing a lot of money because of this.

@ThomasM125 

[confusedabd]

@ParkNYC do you mind describing how do you handle your foreign pension? Mine is government foreign pension so per tax treaty can only be taxed in the other country. However, when I create 1099-R and substitute 1099-R my taxes owed goes up, and not sure how do I offset it. Since, I've already paid taxes on it in the country that gives the pension.

[mariann9999]

You will need IRS form 2555 - you can check for the entry with foreign pension.  Then you will need to calculate what part of your pension may or may not be deductible - for that you will want to look up the "tax treaty" between the USA and the foreign pension.  My interest was in Ireland and the tax treaty came right up and was very readable.  Be aware that form 2555 has several pages to complete - pay attention to detail.

[cmith50]

Enter the generic EIN as 11-1111100 or 99-9999900 and that will fix the filing error.

[DaveF1006]

The best generic EIN is 99-0999999.

[juham2013]

I wonder how you solved this problem?

Cheers,

JJ

[AmyC]

The EIN  99-999000 has worked for several so far.  Form 2555 Instructions  state: 

Foreign earned income also doesn't include the following types of income. 

• Pension and annuity income (including social security benefits and railroad retirement benefits treated as social security).

Instead, you can subtract the nontaxable treaty income, see  United States Income Tax Treaties as Other Income.

Subtract the income

1. Miscellaneous Income, 1099-A, 1099-C, Start
2. Scroll to the bottom
3. Other reportable income, Start
4. Other taxable income?
5. Select YES
6. Description treaty exempt
7. Amount, enter as a negative using negative sign
8. continue

If the payee claims treaty benefits that override or modify any provision of the Internal Revenue Code, and by claiming these benefits the payee’s tax is, or might be, reduced, the payee must attach a fully completed Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the payee’s tax return.

Claiming Tax Treaty Benefits states:

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.

@juham2013