Question

I am a US citizen in UK contributing to UK pension. UKUS treaty allows this as US deduction. Where do I enter it in TT or should I lower my foreign earned income amount?

Forum|Forum|5 years ago
January 23, 2021
1 reply
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I am referring to Article 18 of UK-US tax treaty. Note this question concerns only contributions and not any pension distributions. The source of the funds is UK employment. I'm fairly certain this deduction is allowed, so it's more of a question of how to use Turbo Tax.

Also, is the maximum allowed deduction for these foreign contributions a) the US limit for US 401k contributions (19,500 USD in 2020 for single filers) or b) the the UK limit used by their tax department (around 40,000GBP)?

DaveF1006

Yes, according to an article written by one of our Turbo Tax Experts, "there is not a way to directly enter these retirement contributions for an employee in TurboTax. I recommend that you ask your employer for a "Corrected W-2". Hopefully, your employer can work with the payroll department or payroll service to treat the amount being deducted from your paycheck as a "box 12, code D" deduction.

TurboTax software assumes that 401(k) retirement contributions for employees are correctly reported on the Form W-2. They are supposed to be "already deducted from the W-2 box 1" amount (income). The total retirement contributions so deducted are reported in Box 12 of the W-2, with a code of "D".

The amount of the contribution would be reported in US dollars, which is $19,500 for a taxpayer less than 50 years old. if 50 or over, it is $6500 more.

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