theOAP

I file from the UK, have no US pensions other than US SS, and I file on paper - so I don't have any of the problems of trying to get TT to work. There are 5 foreign pensions for the IRS; 3 company and 2 State (UK and EU). I am also required to file 8938, which includes the 3 company pensions but not the 2 State pensions.

When I first started, I had a very long (and quite friendly) conversation with an IRS agent at the US Embassy (a luxury that no longer exists). His advice was to put the total of all foreign pensions, both company and State, on the "other income" line, and handle the US SS per the treaty (amount from the SSA-1099 on line a, 0 on line b taxable income). No further information was required (except for my records). Therefore I completely agree with your methodology.

I also have a basis in the 3 company pensions. The agent advised to work out the basis for each and deduct the total basis from the gross of the 3 pensions, entering the remainder, along with the State pensions, on the "other income" line. I filed that way for years without any comeback from the IRS.

Recently, the IRS started publishing information that states foreign pensions should be placed on the normal "pensions" line (line a for the gross, line b for the taxable after basis - foreign pensions require the "General Method" not the simplified method). And of course, FATCA 8938 was introduced. So I changed the way I report. I now enter the 3 gross foreign company pensions on "pensions" line a, calculate the basis for each and total the result, deducting it from the gross for the amount on line b. This also allows me to reference the 3 company pensions on 8938. There is a line on 8938 requiring a listing of the total amount of the additional assets (foreign pensions) and where reported on the 1040. I list the 2 foreign State pensions on the "other income" line of schedule 1. For the US SS, on the SS line, I enter on line a the gross amount from the SSA-1099 and 0 on line b, and disregard it for all the rest of the return, including the 1116, as per the IRS agents advice.

I've been doing it this way for the past 5(?) years without any comeback from the IRS.

For those with US pensions (and basis simplified) as well as foreign pensions (and basis general) some other method would likely be required - most likely entering the foreign pensions minus basis on the "other income" line of schedule 1.

The upshot to all this (knew we'd eventually get here!) - doing 4852 for foreign pensions for TT and other tax software is only needed to make TT work. Any amount could be entered on the 4852 and the IRS has no way of knowing if it's correct or not. There is no absolute correct way of completing the IRS tax form. The IRS would probably accept most reasonable methods if they can be substantiated. If challenged, the only accurate evidence will come from the records you provide to the IRS substantiating your figures.

My uninvited 2cents worth.

lansbury

I tried several different ways of doing it using TT and the tax always worked out the same. So I took the stance it probably didn't matter how I declared the income as long as I paid the tax. I keep a spread sheet of the monthly pension received along with the exchange rate for the transfer to the US. If required I can provide bank statements and Transferwise receipts to show correctness.

I for one have always considered your comments on these matters worth a lot more than 2 cents.

durham_lad

+1

MMcD

Ditto here...In fact, it was you OAP and Lansbury who came to my rescue with really well-informed advice, after I posted here for the first time back in 2011.
So...hello and thanks once again

lansbury

It pays to e-file. Did so Sunday and federal refund went into my bank account today.

durham_lad

Excellent news. Good to know that the IRS is not backed up with e-filing.

MMcD

And to be patient (not you, Lansbury....I'm referring to myself)
Turbo Tax has finally got their act together regarding that pesky Form 4852:
The red warnings have disappeared from my saved copies
And....not only does it show my entire return is ready for e-filing...for the 1st time ever TT shows I can efile my State return as well
Whoo hoo

durham_lad

That’s good to hear, thanks.

iceflow

Yep, she is finally there. They kept pushing that availability date out and it was 2/25/21 and it is good to go now.

whitebear

Just done my taxes for 2020 via professional tax preparer, and they have always put UK PENSION INCOME against Other Income. No other forms have been involved.

sid nv

For pension income, I opt for Form 1040 line 5a/5b. Line 5 titled 'Pensions and annuities' seems to match the pension description. If tax filing software requires the creation of some fake 1099 or whatever Form, then the software would seem to be obfuscating what should be a straightforward 1040 form filling exercise.

durham_lad

I agree. Really it's no different from entering UK bank interest on Schedule B without having a 1099-INT. I don't think it matters where the pensions get put as long as they are reported and taxed accordingly.