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UK State Pension and US tax return

UK State Pension and US tax return

Old Mar 3rd 2024, 8:09 pm
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Default Re: UK State Pension and US tax return

Originally Posted by lansbury
My interest in this is solely State based in that Oregon does not tax SS. At present I report the UK State pension as "Other Income".

But for the sake of filling my less productive time, I did start to try and find where SS is defined. The best I could fine is it is reported on SSA-1099 as you say. But is UK State pension not really social security. It is not reported as a foreign account or pension on FBAR etc, and is similar to US SS. Indeed in a discussion with Oregon Department of Revenue they grudgingly conceded I had a point, but for their systems to exempt it from tax it had to be on line 6 on the Federal 1040. The system is set up with no thought to anything not sourced from within the US. So SS only comes from the SSA because they issue the SSA-1099.

Not an argument that there is any chance of winning, but poking the bear fills some idle time.
If I was filing a State return in Oregon I would pose the question directly to the State regulators. It looks like they have good places to ask if foreign SS payments are free of State taxes. Given that SS is funded by US payroll taxes and foreign versions of SS are funded by taxes of foreign governments I would think that unless Oregon has tax treaties with those countries that they are not going to exempt them, but I would definitely inquire.

https://www.oregon.gov/dor/forms/For...et_101-009.pdf
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Old Mar 4th 2024, 5:07 am
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Default Re: UK State Pension and US tax return

Originally Posted by durham_lad
If I was filing a State return in Oregon I would pose the question directly to the State regulators. It looks like they have good places to ask if foreign SS payments are free of State taxes. Given that SS is funded by US payroll taxes and foreign versions of SS are funded by taxes of foreign governments I would think that unless Oregon has tax treaties with those countries that they are not going to exempt them, but I would definitely inquire.

https://www.oregon.gov/dor/forms/For...et_101-009.pdf
I have as I said above I have:-

Indeed in a discussion with Oregon Department of Revenue they grudgingly conceded I had a point, but for their systems to exempt it from tax it had to be on line 6 on the Federal 1040.
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Old Mar 4th 2024, 7:21 am
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Default Re: UK State Pension and US tax return

Originally Posted by lansbury
I have as I said above I have:-
so you did

Someone needs to take one for the team, add it to their 1040 on line 6 and see if the IRS rejects the return. Then report back here.
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Old Mar 4th 2024, 7:00 pm
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Default Re: UK State Pension and US tax return

Originally Posted by lansbury
I have as I said above I have:-
Did they put that in writing?

California also doesn't tax Social Security benefits (or SS Disability) but their tax code specifically defines these benefits as being "from the United States".
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Old Mar 4th 2024, 8:13 pm
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Default Re: UK State Pension and US tax return

Originally Posted by durham_lad

Someone needs to take one for the team, add it to their 1040 on line 6 and see if the IRS rejects the return. Then report back here.
I'm sure somebody already has, and we can guess the outcome.
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Old Mar 4th 2024, 10:35 pm
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Default Re: UK State Pension and US tax return

Hi. Looks like linec6 is a non no!

My problem is I have just found uk pension office has paid me backdated 2022 pension in 2023. In 2022 I did not file. Do I just pay tax in 2023 or must I go a filing for 2022 with full verbose explanation. Don't have much UK paperwork. Just bank statements. Thoughts?
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Old Mar 5th 2024, 12:20 am
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Default Re: UK State Pension and US tax return

Absent permission from the IRS to use an accrual method of taxation (which is much more of a hassle and usually only granted to seasonal businesses) you usually pay tax in the year income is received. It makes no difference when it should have been paid, whether it was backdated, etc. Therefore if deposited electronically into your bank account in 2023, it is part of your 2023 income and tax is due for the 2023 year. If it was a check dated December, mailed in December, but deposited in January then it technically would be part of your 2022 income even if it was received in January, but that one could be argued successfully if proof exists that you had no control of it until January.
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Old Mar 5th 2024, 12:39 am
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Default Re: UK State Pension and US tax return

THANKS VERY MUCH GLASGOW.
Do i need to write an explanation of what ocurred or just leave is as pension income 2023.
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Old Mar 5th 2024, 1:06 am
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Default Re: UK State Pension and US tax return

No explanation required with regard to the 2022/2023 issue. So long as you declare and pay tax on the entire amount and don’t try to hide it under Social Security they won’t really care where you enter it. In fact it will likely be filed automatically without any human intervention whatsoever. If you go with line 5 and Form 4852 which is recommended do what Durham_lad stated using 99-1234567 as the Federal ID and make a statement that this is the UK state pension and the UK does not issue a 1099. Keep it simple. You will be one of many thousands using that approach, and in any case the chances of anyone ever reading your explanation are tiny.
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Old Mar 7th 2024, 8:26 pm
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Default Re: UK State Pension and US tax return

Thanks super helpful. Just preparing 1099 for irs.
It asks for a date of payment do i need 12 1099s for a monthly a pension. If not what date should use just the year 2023 or leave it blank.
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Old Mar 7th 2024, 9:32 pm
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Default Re: UK State Pension and US tax return

You should be using Form 4852 as a substitute 1099, not an actual 1099. Form 4852 only asks for the year not the exact date, so include all 2023 income and only one form is therefore required. (For each source of income).
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Old Mar 8th 2024, 12:24 am
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Default Re: UK State Pension and US tax return

Forgot, is uk state pension a qualified or non qualified pension under the treaty and when filling 1040, thanks
naturalized citizen.
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Old Mar 8th 2024, 1:07 am
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Default Re: UK State Pension and US tax return

Non qualified but Form 4852 does not require that information so not sure where you think you need to enter that data.
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Old Mar 8th 2024, 2:34 am
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Default Re: UK State Pension and US tax return

Originally Posted by ohiocalling
OK, So the concensus is that UK State pension goes on line 5. This way I will still get Ohio State deductions. I then fill on form 4852.
Can you explain this Ohio bit some more. What's the difference between your pension going on line 5 vs going on line 8, as far as Ohio is concerned? At the Federal level line 5a and 5b will be the same (it's all taxable) and if you put it on line 8 instead it makes no difference. But does Ohio perhaps exclude lines 2 thru 6 from their taxable income calculation, whereas they do include income on line 8?
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Old Mar 10th 2024, 12:24 am
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Default Re: UK State Pension and US tax return

Originally Posted by Pierre_Tete
It does say that and I used to do it that way, but since lines 2 thru 6 have taxable and non-taxable parts, those lines are assuming you have 1099 forms to show the taxable amount. Foreign pensions probably don't supply a 1099-R. If you are doing a 1040 manually you can enter your foreign pensions on line 5 but if you use something like TurboTax it will force you to do a substitute 1099-R which is a nuisance if there wasn't one in the first place. I report foreign pensions as 'other income' on Schedule 1 which does not require substitute 1099's (it ends up on line 8 of the 1040). And since those pensions are fully taxable it all adds up correctly.
Not requiring a substitute 1099-R has another benefit for those, like you and me, who live in California. If you have a substitute 1099 (or a form 4852), California precludes you from filing electronically. Given, as I mentioned previously, California taxes any foreign "social security" as ordinary income anyway, there's really no advantage in doing something that requires a substitute 1099.

Last edited by Giantaxe; Mar 10th 2024 at 12:29 am.
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