Question

Paid foreign tax credit on pension paid by foreign country not working !

Forum|Forum|1 year ago
March 1, 2025
1 reply
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I have been at this for several DAYS now and nothing seems to work.

I am paid a pension by a foreign government that I need to report. This pension is earned income based on employment history in the foreign country that I used to live in more than 20 years ago. There is an international bi-lateral tax agreement between said country and the U.S., to prevent double-taxation. Only the country where I used to live have the right to tax the pension I am getting although I am under the obligation to report it as income to the IRS. The foreign entity paying the pension does not have a 1099-R form. Even filing a "Substitute 1099-R" won't work as TT (Home & Biz) asks me to fill in fields that can't be done as there is NO 1099-R form to be had. The software seems to think I HAVE the 1099-R which I don't have.

Method 1:

I have tried to report the foreign paid pension under foreign income section as per described above, but that is not possible. The Substitute 1099-R form seems to assume that I am reporting income from an IRA distribution which is not the case. Leaving a slew of fields blank drives TT crazy so this method simply does not work.

Method 2:

Trying to report the foreign paid pension under "Miscellaneous" or "Other income" works BUT, I can't take a Foreign Tax Credit using this method. Reason being that the foreign tax credit can't be taken against income that is NOT reported under the Foreign Income section.

Am I the only individual in the universe receiving a pension from a foreign country who can't properly file taxes using TT Home & Biz?

JJ

TurboTax Home & Biz Windows

R

rogge1722

Do you have any foreign income frm a 1099 or a K-1 as this influences the screen presentations?

J

juham2013Author

The only foreign income that I have reported is very modest dividends from company shares I own.

I also fell to thinking that this sort of income should be termed "foreign social security income" as said income wasn't accrued by plowing a portion of my salary into a 401(k) or anything like that. The "pension" from overseas could be likened to "social security payments" here in the U.S.

The issue is not really that I can't report this income BUT rather the impossibility of claiming a tax credit on this income. The international tax treaty between the U.S. and the country where I was born also stipulates that this income is not taxable by the IRS. Of course, I am obligated to report the income to the IRS and the tax credit that I am due will more than likely NOT make any difference in the amount of total taxes we pay here in the U.S. We're filing married jointly.

Thank you so much!

JJ