Pensions from UK question - US Tax Form
#46
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Joined: Apr 2011
Location: The Shire
Posts: 1,117
Re: Pensions from UK question - US Tax Form
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.
#47
Re: Pensions from UK question - US Tax Form
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.
I for one have always considered your comments on these matters worth a lot more than 2 cents.
#49
Re: Pensions from UK question - US Tax Form
So...hello and thanks once again
#50
Re: Pensions from UK question - US Tax Form
It pays to e-file. Did so Sunday and federal refund went into my bank account today.
#52
Re: Pensions from UK question - US Tax Form
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
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
#53
BE Forum Addict
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,131
Re: Pensions from UK question - US Tax Form
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
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
#55
Forum Regular
Joined: Jun 2011
Posts: 71
Re: Pensions from UK question - US Tax Form
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.
#56
Re: Pensions from UK question - US Tax Form
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.
#57
BE Forum Addict
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,131
Re: Pensions from UK question - US Tax Form
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.