Question

Credit on foreign taxes paid on pension

Forum|Forum|1 year ago
March 1, 2025
1 reply
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Hi,

Could anyone confirm that I have understood the foreign tax credit carry-over correctly? When I am looking at the summary of our family income (I am filing married jointly) and the taxes that we've paid, I see that only a portion of the taxes I paid on the pension was allowed. Again, this pension was paid by a foreign entity in Europe.

Q1: Does that mean that the portion that was disallowed will carry over to tax year 2025?

Q2: Is a foreign tax credit treated differently for a "lump sum" versus monthly payments? I got a lump sum payment this first time only and the pension is paid monthly going forward.

Q3: After I reported this foreign pension and taxes paid on it, the interview process asked me to modify the total gross annual income, either up or down (in my case, it will be down = placing a negative number in the field). I was "surprised" at this question as I have never had TT software prompting me on this. I assume that this is "normal?"

Q4: I presume that profit/loss from sale of company shares go under under "gross annual income" as well, correct?

Awaiting pearls of wisdom to save my sanity!

JJ

TurboTax Home & Biz Windows

DaveF1006

Yes, let's answer each question individually.

Any unused foreign tax credit will carry forward up to ten years if not used in the current year.
The foreign tax credit is not treat4ed differently for a lump sum payment.
You are asked to modify your total gross annual income to accurately reflect your income from all sources, both domestic and foreign.
Yes, the sales of foreign company stock will be included under Gross Annual income.

Please reach out if you have additional questions.

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J

juham2013Author

Hi DaveF1006,

I appreciate your responses.

On 3, I was a little surprised as TT had never asked me to change the gross annual income figure before.

When I chose to file a "substitute" 1099-R , there are many fields that I am asked to fill in although I don't have a 1099-R. I can't dream up figures for boxes that aren't there as I don't have a 1099-R form. Embedding an "example" screen below. For instance, "Capital gain" is not even relevant as this is a pension that I have paid foreign taxes on. "Total distribution" is not relevant either as I am not closing out an account and going forward I am paid a pension every month. So, what is your advice?

Thanks!

JJ

J

juham2013Author

On 3 again, I would think that TT automatically totes up foreign and domestic income. Isn't this software supposed to be "smart"? Seems really weird to me that one needs to manually "tweak" total income.

JJ