UK bank account and pension enquiry

[Helen123]

Hi

I hope someone can help. I just moved to US from UK. Therefore I have UK bank saving accounts and one previous employer workplace pension account. I have three questions and hope some experts can help. 

1. If I use turbo tax, is it enough for me to fill in my information of my UK bank and pension? I do not contribute or take out money from the pension. I assume I only need to fill in Fbar and tax form 8938 for them?  

2. For the pension fund, the policy number has the format of A000/000. I think we cannot input "/" in the account number. How shall I input it?  

3. I didnt work in the UK for more than 10 years. Therefore, I assume I am not qualified for UK state pensioin. However, if I want to do contribution for national insurance. I guess after a few years, I may be able to claim state pension in the future. After I am qualifying to get state pension when I am old, do I need to report state pension (no withdraw after until 20 or 30 years) in the Fbar and 8938 or only after I get the distribution, I start reporting my state pension (if  I will have)?

Thanks for the help. 

[DaveF1006]

Yes, according to  IRS FAQ sheet, If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you. If the total value of your bank accounts and pensions exceed the aggregate value of $50,000 at any time during 2022, then you report these on a 8938.  Turbo Tax does handle this reporting.  I will outline the steps after we address your additional questions. 

Additionally there is an FBAR requirement to file these as well if the aggregate amount of the pensions and accounts exceed $10K. Turbo Tax does not handled this filing but you will report these here.

If the program does not allow a "/", try entering without. The policy number format is not a critical issue as long as you report it.

Also, just as an FYI, according to this IRS FAQ, Income received from foreign pensions or annuities may be fully or partly taxable, even if you do not receive a Form 1099 or other similar document reporting the amount of the income. This would include interest that may have been received or accumulated in your account. 

i am not sure of the point you were making about a contribution made to your foreign pension plan. if you are asking if this is a tax-deductible contribution, the answer is no. This tax deduction is only reserved for US based retirement accounts.

Here is the procedure for filing the 8938.

1. Open or continue your return if you're not already in it.
2. Search for 8938 and select the Jump to link at the top of the search results.
3. On the Foreign Financial Assets screen, select Yes, I have foreign financial assets.

[Helen123]

Many thanks. 

1. For the UK  workplace pension, if I do not contribute any money or receive any income, I assume I do not need to do anything at my 1040 form, right?

2. Since you mention the contribution to the state pension is not tax-decutable, I assume it shouldnt be reported to IRS, right?

[DaveF1006]

The answer is yes to both questions because: 1) There is no distribution to the pension plan. 2) Since this is a foreign pension, contributions to the plan do not receive tax-favored treatment unless it is specified in a treaty agreement. 

[Helen123]

Hey 

I have two questons to check:

1. One of my UK banking accounts do not have any interests but only have some balance. I only report the max value to Fbar and 8938, and I do not need to report the account to 1040 or other tax form, right?

2. In terms of the UK pension, I only receive the annual statement. since you agree that I do not need to report it at 1040 (Previous empolyer do not make contribution any more and I do not take any distribution not old enough). I just report the value (That is the value at the end of the year) on the annual statement on my Fbar and 8938 as the max value, right? and I assume except for Fbar and 8938, no other tax forms need to report, right?

Many thanks

[DaveF1006]

Let's address your questions individually.

1. You do not need to report your foreign accounts on a 1040 unless these earn interest or dividends. Since you have an obligation to report your worldwide income, interest and dividend reporting is required. 
2. You do not need to report your foreign pension on a 1040 unless you receive distributions.

So for both your foreign accounts, including pensions, your only reporting requirement is on the FBAR and 8938. None of this is reported on the 1040 unless income is generated from these accounts.

@Helen123  

[Helen123]

Got it, many thanks