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

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!

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.

Re: Pensions from UK question - US Tax Form
 

I do the same.

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

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.

Re: Pensions from UK question - US Tax Form
 

According to 1040 tax Instructions: Report distributions from foreign pension plans on lines 5a and 5b

Re: Pensions from UK question - US Tax Form
 

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

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?

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

5 foreign Pensions. You’re well set!!

Re: Pensions from UK question - US Tax Form
 

Thanks.

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

Pleased to be of service kind sir.

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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? ***

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.

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.

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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

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.

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

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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:

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?

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

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.

Re: Pensions from UK question - US Tax Form
 

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,

Re: Pensions from UK question - US Tax Form
 

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

Re: Pensions from UK question - US Tax Form
 

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.

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.

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 ?

Re: Pensions from UK question - US Tax Form
 

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).

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.

Re: Pensions from UK question - US Tax Form
 

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/

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?