robin1234

Back in December 2012, nun was good enough to spell out how to report the British State Pension on the 1040. It should go on line 16, and the whole amount is taxable. Lansbury also contributed good information, thanks guys, I printed off those posts and put them in my pile of notes for tax time. Now that I'm finishing off my 1040, using the tried and true pencil and paper method, it leaves me with a question about the pension and line 16.

Line 16 seems to be a catchall for all retirement income distributions except US SS. For US source income from annuities and 403b and the like, there'll be a 1099-R to back it up. But with the British State Pension (my wife started to get hers last summer), you just have to add it in with other sources of income with no paperwork to back it up, no explanation of source? It just seems odd to me that there is no schedule behind line 16 where you can list out different sources of income (kind of like line 8 and line 9 have the Schedule B to back them up.)

Any enlightenment gratefully received; and btw, I did confirm that the good folks in the UK did not withhold any tax.

Michael

Forms (1099's, w-2's, etc.) are sent to both you and the IRS by US agencies and companies but not required for foreign sources of income. The government normally trusts people that they declared all foreign income but just in case they audit you, you should keep bank statements indicating foreign sources of income.

However even the gain or loss on US stock sales or property are not reported to the IRS so they normally trust people to report that income so brokerage or title company records should be kept for those also.

robin1234

Thanks Michael. Further, I was just poking around, looking for further advice, and some folks are advising to fill out a Form 4852 as substitute for 1099R, in these exact circumstances. Rationale is, in some states there is a deduction or exemption for pension income, and explicating the amount received from the UK Dept of Pensions on a Form 4852 would allow one to take advantage of any state deduction or exemption.

lansbury

Our CPA hasn't filled out any further forms since my wife got her pension. Now two returns ago. Just puts the amount in the line and leaves it at that. So far no problems have arisen.

Only record of the payments we could produce if necessary would be an online print out from our bank statement to show the amount received.

Michael

If it helps with state income taxes, then do it. Normally there isn't any penalty for not filing out a form as long as the income is reported and usually if the reported income is higher than what the IRS knows about, this does not normally trigger an audit.

Giantaxe

For stocks purchased after Jan 2011 the cost basis of sales is now reported to the IRS.

Michael

The cost basis if purchased in that year but not necessarily the gain. Although the gain may be calculated on the year end statement (purchase price and selling price) and possibly even on the 1099, that is not a requirement since the stock could have been transferred from another brokerage and the purchase price may be unknown.

robin1234

Just to update, I have decided to go the Form 4852 route for the 1040 line 16, using it essentially as a substitute 1099-R. Reason is, New York State (civilised state that it is) does not tax pension income. Form 4852 will provide a paper trail for my NYS IT-201, indicating that the income is British State Pension and not taxable by NYS.

I'm filing paper snail-mail, using paper & quill-pen method.