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iceflow Feb 2nd 2021 11:11 pm

Pensions from UK question - US Tax Form
 
Folks,
For anyone receiving either the UK State or ex UK Employer pension......what form do you use to report the income on the US Tax Return. I have been using Form 4852 which is a substitute for a 1099-R. It's been ok so far but just wondering if this is correct or what others use?


Thanks

Nutmegger Feb 3rd 2021 2:09 am

Re: Pensions from UK question - US Tax Form
 
There is no need to create any kind of 1099. Just enter the pension as “other income” on line 21 of schedule 1 to form 1040. Unless the forms have changed, that is!

durham_lad Feb 3rd 2021 7:27 am

Re: Pensions from UK question - US Tax Form
 
I use form 4852 (substitute 1099-R) to report my 2 UK private pensions but I really don’t think it matters and know that plenty of others report it as other income and I'm sure the IRS doesn’t care as they get their money anyway. Being a USC living in England I won’t be reporting my OAP at all to the IRS as the tax treaty says it is only taxable in the country of residence.

Note that SS is only taxable in the UK once you are living there.

MidAtlantic Feb 3rd 2021 11:25 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by Nutmegger (Post 12967494)
There is no need to create any kind of 1099. Just enter the pension as “other income” on line 21 of schedule 1 to form 1040. Unless the forms have changed, that is!

I do the same.

iceflow Feb 3rd 2021 1:06 pm

Re: Pensions from UK question - US Tax Form
 
OK folks thanks for the responses. I was just polling to see what if any options there are.

Thanks

lansbury Feb 3rd 2021 8:32 pm

Re: Pensions from UK question - US Tax Form
 
If you use Turbo Tax you cannot submit a substitute 1099 as TT requires you input the pension providers tax reference to efile. (I found that out the hard way). So I put my UK pensions under Miscellaneous Income in TT and in the explanation box put Pensions from the United Kingdom. Not sure what other tax software allows.

TT then puts the amount on line 8 of this years 1040. Other income from Schedule 1 line 9.

retman Feb 3rd 2021 8:37 pm

Re: Pensions from UK question - US Tax Form
 
According to 1040 tax Instructions: Report distributions from foreign pension plans on lines 5a and 5b

durham_lad Feb 3rd 2021 9:02 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12967785)
If you use Turbo Tax you cannot submit a substitute 1099 as TT requires you input the pension providers tax reference to efile. (I found that out the hard way). So I put my UK pensions under Miscellaneous Income in TT and in the explanation box put Pensions from the United Kingdom. Not sure what other tax software allows.

TT then puts the amount on line 8 of this years 1040. Other income from Schedule 1 line 9.

I always put 99-1234567 and in section 10 simply state that the provider is a UK company

vespucci Feb 4th 2021 2:31 am

Re: Pensions from UK question - US Tax Form
 
Can a substitute for a 1099-R be e-filed or does it have to be mailed?

lansbury Feb 4th 2021 5:30 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12967796)
I always put 99-1234567 and in section 10 simply state that the provider is a UK company

That's sneaky, never thought of that. However I've used Miscellaneous Income for the past 2 years and had no problems, saves having to do 5 substitute 1099Rs.

durham_lad Feb 4th 2021 8:49 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by vespucci (Post 12967837)
Can a substitute for a 1099-R be e-filed or does it have to be mailed?

Yes. I use Turbotax but I assume all tax software will efile the substitute 1099R

durham_lad Feb 4th 2021 10:38 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12967853)
That's sneaky, never thought of that. However I've used Miscellaneous Income for the past 2 years and had no problems, saves having to do 5 substitute 1099Rs.

5 foreign Pensions. You’re well set!!

vespucci Feb 4th 2021 5:42 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12967890)
Yes. I use Turbotax but I assume all tax software will efile the substitute 1099R

Thanks.

lansbury Feb 4th 2021 5:58 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12967928)
5 foreign Pensions. You’re well set!!

Mrs L and I are extremely grateful to be that fortunate.

lansbury Feb 4th 2021 7:32 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12967796)
I always put 99-1234567 and in section 10 simply state that the provider is a UK company


Originally Posted by lansbury (Post 12967853)
That's sneaky, never thought of that. However I've used Miscellaneous Income for the past 2 years and had no problems, saves having to do 5 substitute 1099Rs.

Having checked the 1040 instructions I decided to follow your advice and amend my TT return. (Not filed yet).


durham_lad Feb 4th 2021 8:11 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12968196)
Having checked the 1040 instructions I decided to follow your advice and amend my TT return. (Not filed yet).

Pleased to be of service kind sir.

iceflow Feb 5th 2021 6:56 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12968196)
Having checked the 1040 instructions I decided to follow your advice and amend my TT return. (Not filed yet).

What I've done in the past with TT is ignore the "1099-R Federal ID blank" error on smart check and put a line into the two explanation notes that are required for the 1099-R that the payer is a UK company and as such doesn't have a Federal ID number. With all that said, so far I can't file as according to TT Form 4852 has not been approved by IRS......but....I can find form 4852 on the IRS website for a rev: 9/2020.

Thanks all.

lansbury Feb 6th 2021 12:23 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by iceflow (Post 12968530)
What I've done in the past with TT is ignore the "1099-R Federal ID blank" error on smart check and put a line into the two explanation notes that are required for the 1099-R that the payer is a UK company and as such doesn't have a Federal ID number. With all that said, so far I can't file as according to TT Form 4852 has not been approved by IRS......but....I can find form 4852 on the IRS website for a rev: 9/2020.

Thanks all.

I haven't tried to file yet as I'm still waiting for a couple of pieces of information to complete the return. We'll see what happens when those arrive about the 19th. Mind you I have faith that durham_lads workaround works.

MMcD Feb 6th 2021 11:06 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by iceflow (Post 12967457)
Folks,
For anyone receiving either the UK State or ex UK Employer pension......what form do you use to report the income on the US Tax Return. I have been using Form 4852 which is a substitute for a 1099-R.

I've used Form 4852 (with Turbo Tax filing) for years.
Always enter 11-1111111 as the "...Payer's TIN" in Box 8
And have always been able to e-file my Federal taxes
However, California has never accepted e-filing of that form - so must mail my State taxes.
I'm hesitant to switch to the easy solution, and use Nutmeggars suggestion (post #2, above) - given that I file 4 of these forms every year and think consistency is probably a good practice.
The only thing is....
This year each of the 4852's has a RED WARNING on the upper right :

https://cimg1.ibsrv.net/gimg/british...9a8db75f13.png


***Does anyone else see that same red warning on the form when using Turbo Tax for 2020 filing? ***


Originally Posted by durham_lad (Post 12967890)
Yes. I use Turbotax but I assume all tax software will efile the substitute 1099R

As I mentioned above...e-filing Federal return has worked for me in past years....but each State has its own filing requirements - and they vary. So for anyone who is required to file State taxes - best check before deciding which of the 2 methods to use.



Nutmegger Feb 6th 2021 11:22 pm

Re: Pensions from UK question - US Tax Form
 
MMcD, I’ve been doing that for over a decade with no problems. Initially set up that way by my accountant, nowadays DIY with TT.

celticgrid Feb 7th 2021 12:09 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by MMcD (Post 12968915)
Does anyone else see that same red warning on the form when using Turbo Tax for 2020 filing? ***

Not yet for 2020 - it'll be another week or so before I start loading all the data into Turbo Tax.

However I did get this last year. Eventually, with no change by me, other than applying a TT update, it went away. If I recall correctly it was because the final version of the form had not yet been signed off by the IRS. It was just a matter of being patient.

lansbury Feb 7th 2021 12:34 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by MMcD (Post 12968915)

***Does anyone else see that same red warning on the form when using Turbo Tax for 2020 filing? ***



I think you might be getting that warning on the form because the IRS has not updated that form for 2020 yet. I just looked at my TT file for this year and it has a warning not to file until the 4852 is ready for this year. But also has a warning saying it cannot be e-filed at all.

lansbury Feb 7th 2021 12:43 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by Nutmegger (Post 12968918)
MMcD, I’ve been doing that for over a decade with no problems. Initially set up that way by my accountant, nowadays DIY with TT.


That was also the advice given on the TT forums so you could overcome not being able to e file with substitute 1099s and form 4852, without faking IRS ID numbers. Which was why I did it that way.

MMcD Feb 7th 2021 7:02 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by Nutmegger (Post 12968918)
MMcD, I’ve been doing that for over a decade with no problems. Initially set up that way by my accountant, nowadays DIY with TT.

Thanks Nutmegger - Your accountant obviously knew what he was doing and chose the most straightforward path. When I initially struggled with TT, and how the heck to report foreign earnings in a system not originally set up to easily accommodate foreign income reporting - I came upon the 'workaround' method. It's a pita - but I'll stick with it to be consistent


Originally Posted by celticgrid (Post 12968923)
Not yet for 2020 - it'll be another week or so before I start loading all the data into Turbo Tax.
However I did get this last year. Eventually, with no change by me, other than applying a TT update, it went away. If I recall correctly it was because the final version of the form had not yet been signed off by the IRS. It was just a matter of being patient.

Many thanks!
That's a relief. It's what I was wondering / hoping..
I dipped into Turbo Tax much earlier this year ( stuck in house :tape: , Covid confined, climbing walls, time on hands. ..)
Hope the four 4852s already completed shed their red warnings in a few weeks.


Originally Posted by lansbury (Post 12968926)
I think you might be getting that warning on the form because the IRS has not updated that form for 2020 yet. I just looked at my TT file for this year and it has a warning not to file until the 4852 is ready for this year. But also has a warning saying it cannot be e-filed at all.

As I recall...It always says that for some reason. Nevertheless - I've ALWAYS e-filed Federal return. Not the State return ( which must include a copy of Federal ) So Lansbury - if you do switch to this method and save yourself a trip to the post office - you might want to first be sure you can also e-file your Oregon taxes - if they also include the 4852s

lansbury Feb 8th 2021 9:13 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by MMcD (Post 12969207)

As I recall...It always says that for some reason. Nevertheless - I've ALWAYS e-filed Federal return. Not the State return ( which must include a copy of Federal ) So Lansbury - if you do switch to this method and save yourself a trip to the post office - you might want to first be sure you can also e-file your Oregon taxes - if they also include the 4852s

Search as I may on Oregon's tax web site I cannot find out if I can e-file a 4852 or not. Having tried both ways, Schedule 1 or substitute 1099 in TT, the tax works out the same, as would be expected. So I guess it is sticking with the Miscellaneous Income as I have in the past. It might not be as per 1040 instructions but it is what TT recommends and is the easiest.

MMcD Feb 8th 2021 11:05 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12969613)
Search as I may on Oregon's tax web site I cannot find out if I can e-file a 4852 or not. Having tried both ways, Schedule 1 or substitute 1099 in TT, the tax works out the same, as would be expected. So I guess it is sticking with the Miscellaneous Income as I have in the past. It might not be as per 1040 instructions but it is what TT recommends and is the easiest.

I'd recommend what I'm doing (assuming you have already gone to the trouble of preparing the 4852s) - leave them in your saved TT pdf file.
As soon as Turbo Tax starts to accept completed returns for filing in a few weeks - click on the FILE tab at the upper right.
You won't have to actually file, but if you initiate the process TT will let you know whether or not you'll be able to e-file - if you select that that's what you prefer to do.
Then, if you find Oregon WON'T accept e-filing because of that form, you'll have 2 options:
A) e-File Federal Return and Print out / Snail Mail Oregon Return (that's what I do every year with my Federal and CA. returns
or...
B) Go back to the TT FORMS view, and remove both the 1099-Rs and the associated 4598s.
Submit a Schedule 1, Line 8 Form in it's place (just as I think ? you've been doing in the past)
E-file the whole shebang

DONE! :beer:


Russet Feb 13th 2021 4:39 pm

Re: Pensions from UK question - US Tax Form
 
Thinking about taking distributions from my UK pension at age 55, as this is allowed, but I know IRS impose a 10 % penalty on 401k/IRA early distributions before age 59.5. When I report this income on my US return is it going to be subject to the 10% penalty too?

lansbury Feb 13th 2021 4:48 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by MMcD (Post 12969645)
I'd recommend what I'm doing (assuming you have already gone to the trouble of preparing the 4852s) - leave them in your saved TT pdf file.
As soon as Turbo Tax starts to accept completed returns for filing in a few weeks - click on the FILE tab at the upper right.
You won't have to actually file, but if you initiate the process TT will let you know whether or not you'll be able to e-file - if you select that that's what you prefer to do.
Then, if you find Oregon WON'T accept e-filing because of that form, you'll have 2 options:
A) e-File Federal Return and Print out / Snail Mail Oregon Return (that's what I do every year with my Federal and CA. returns
or...
B) Go back to the TT FORMS view, and remove both the 1099-Rs and the associated 4598s.
Submit a Schedule 1, Line 8 Form in it's place (just as I think ? you've been doing in the past)
E-file the whole shebang

DONE! :beer:

For some reason I've only just seen this post. Thanks MMcD for the way to get TT to check Oregon e-filing. I'll give that a try when I ready, and if they don't I think I'll go back to Schedule 1. Using Schedule 1 hasn't been a problem in previous years, and e-filing gets the refund quicker. I had a big dental bill in 2020 so the anticipated refund is quite large and I'd like it ASAP.

durham_lad Feb 13th 2021 5:23 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by Russet (Post 12971514)
Thinking about taking distributions from my UK pension at age 55, as this is allowed, but I know IRS impose a 10 % penalty on 401k/IRA early distributions before age 59.5. When I report this income on my US return is it going to be subject to the 10% penalty too?

No 10% early withdrawal penalty from the IRS for taking your UK pension at age 55. I’ve been there and done that.

Russet Feb 13th 2021 7:04 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12971523)
No 10% early withdrawal penalty from the IRS for taking your UK pension at age 55. I’ve been there and done that.

Thank you - I thought that may have been the case!

lansbury Feb 19th 2021 10:43 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12967796)
I always put 99-1234567 and in section 10 simply state that the provider is a UK company

Well I've tried that and combinations thereof:

99-1234567
00-0000000
11-1111111

and every time TT rejects the form with an invalid employers number error. So guess back to schedule 1 and miscellaneous income.

durham_lad Feb 20th 2021 9:47 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by lansbury (Post 12975470)
Well I've tried that and combinations thereof:

99-1234567
00-0000000
11-1111111

and every time TT rejects the form with an invalid employers number error. So guess back to schedule 1 and miscellaneous income.

At what point does TT reject it? I just did a validation check on my 2020 return and TT says that it is waiting for the IRS to confirm forms 4852. I currently have those forms completed with the EIN numbers of 99-1234567, imported from the previous year. I've been doing this for 14 years when I first starting receiving a UK private pension.

If it does reject the EIN numbers when I come to file then I'll use your method. I don't really think it makes any difference except the 4852 forms give plenty of space to explain where the pension is coming from and why there is no 1099-R. I use the TT downloaded version rather than on-line if that makes a difference,

MMcD Feb 20th 2021 3:17 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12975558)
At what point does TT reject it? I just did a validation check on my 2020 return and TT says that it is waiting for the IRS to confirm forms 4852. I currently have those forms completed with the EIN numbers of 99-1234567, imported from the previous year. I've been doing this for 14 years when I first starting receiving a UK private pension.

If it does reject the EIN numbers when I come to file then I'll use your method. I don't really think it makes any difference except the 4852 forms give plenty of space to explain where the pension is coming from and why there is no 1099-R. I use the TT downloaded version rather than on-line if that makes a difference,

That's exactly what I was wondering - maybe a difference in the software mechanics between downloaded vs online forms
I also use the downloaded version.
It shouldn't make any difference to final result - but perhaps TT is stepping over itself in the processing of the input of info, depending on which version one uses...

But more to the point - TT (in downloaded version) is showing that Form 4852 simply isn't ready (at their end) for any kind of filing ..
It says that form will be ready for mail filing on 25 Feb. so I believe we'll know then whether e-filing will also be accepted. Meanwhile I'm still seeing the big red DO NOT FILE warning mentioned in my 1st post (above), atop each of my four 4852s


lansbury Feb 20th 2021 4:55 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by durham_lad (Post 12975558)
At what point does TT reject it? I just did a validation check on my 2020 return and TT says that it is waiting for the IRS to confirm forms 4852. I currently have those forms completed with the EIN numbers of 99-1234567, imported from the previous year. I've been doing this for 14 years when I first starting receiving a UK private pension.

If it does reject the EIN numbers when I come to file then I'll use your method. I don't really think it makes any difference except the 4852 forms give plenty of space to explain where the pension is coming from and why there is no 1099-R. I use the TT downloaded version rather than on-line if that makes a difference,

I use the download version as well. It rejects the forms at the part it does the error checks. I can only think that as you have no problems it might be something to do with the Oregon State return being part of the process.

lansbury Feb 21st 2021 4:51 pm

Re: Pensions from UK question - US Tax Form
 
I gave up with the substitute 1099 and 4852, and went back to schedule 1. E-filed yesterday afternoon and got back note of acceptance from IRS and Oregon within a few hours.

geak Feb 25th 2021 4:46 am

Re: Pensions from UK question - US Tax Form
 
I got a few (4) UK pensions consolidated into a single defined benefits SIPP. Never taken any distribution as yet. Just plan on taking.
I assume there is a tax free amount. Don’t see how to reflect that in Form 4852 or Form 1040 Schedule 1.
So many people have experience here, just wonder if you could share here.

On Form 4852
Line 8 b Taxable amount
How to determine that ?

Line 8 e Capital gain (Included in Line 8 b)
Does it mean any amount above tax free is capital gain ?

Line 9 How did you determine the amounts in line 7 & 8
What document should be referenced here ?

If Form 1040 Schedule 1 Other Income is used, how to reflect the tax free amount ?



durham_lad Feb 25th 2021 7:44 am

Re: Pensions from UK question - US Tax Form
 

Originally Posted by geak (Post 12977236)
I got a few (4) UK pensions consolidated into a single defined benefits SIPP. Never taken any distribution as yet. Just plan on taking.
I assume there is a tax free amount. Don’t see how to reflect that in Form 4852 or Form 1040 Schedule 1.
So many people have experience here, just wonder if you could share here.

On Form 4852
Line 8 b Taxable amount
How to determine that ?

Line 8 e Capital gain (Included in Line 8 b)
Does it mean any amount above tax free is capital gain ?

Line 9 How did you determine the amounts in line 7 & 8
What document should be referenced here ?

If Form 1040 Schedule 1 Other Income is used, how to reflect the tax free amount ?

I have never heard of a defined benefit SIPP. I gather that you put the cash value of defined benefit pensions into a SIPP which is now a large pot of money that you invest yourself and choose how much to withdraw each year. Unless your defined benefit pensions had a tax free portion then all of the money sitting in the SIPP is tax deferred, i.e. it has never been taxed so has a “cost basis” of zero.

Just like a traditional IRA in the USA where only before-tax money has been saved then I would expect all distributions to be fully taxable. (There are IRAs with a combination of before and after tax contributions and then distributions are partly tax free, in which case form 8606 keeps track of the tax free basis from year to year - been there and still doing that).

geak Feb 25th 2021 10:55 am

Re: Pensions from UK question - US Tax Form
 
SIPP is defined contribution. Thanks durham_lad for the correction.
There is a 25% tax free portion documented in UK SIPP.
Try to understand how to reflect it in Form 4852 or Form 1040 Schedule 1.

durham_lad Feb 25th 2021 12:28 pm

Re: Pensions from UK question - US Tax Form
 

Originally Posted by geak (Post 12977302)
SIPP is defined contribution. Thanks durham_lad for the correction.
There is a 25% tax free portion documented in UK SIPP.
Try to understand how to reflect it in Form 4852 or Form 1040 Schedule 1.

There are various threads about whether or not the IRS recognizes the tax free lump sum that HMRC allows. I cannot remember what the consensus is as it is not something I have done or have the option to do. I suspect that the IRS will want to tax it. Hopefully someone will be along shortly with a more knowledgeable answer.

here is a recent discussion on the issue
https://britishexpats.com/forum/usa-...mp-sum-936649/

MMcD Feb 25th 2021 3:16 pm

Re: Pensions from UK question - US Tax Form
 
Has anyone managed to e-file IRS Form 4852 (Substitute 1099-R) yet with their 2020 return?
I'm still seeing the red DO NOT FILE warnings on the 4 forms I've saved for filing in Turbo Tax Deluxe (see screen shot above in my 1st post).
(That, despite the fact that TT indicates that form is ready for filing by mail :confused: )

Even more to the point, on their "Federal Individual Form Availability" page, (https://care-cdn.prodsupportsite.a.i...ndividual.html ) TT seem to indicate pretty decisively that the 4852 is and will remain "UNSUPPORTED" for efile this year.

Has anyone found otherwise?


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