It's Impossible to Receive Foreign Pension Tax Exclusion Using Turbo Tax Software. This Can Affect Our Tax Refunds.

Forum|Forum|2 years ago
January 18, 2024
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If you are like myself receiving a retirement pension from a foreign country, you won't be able to file the 1099-R form and properly transfer that information to your state tax return. Because foreign governments don't use or have the US Payer's Federal identification numbers (FIN) the 1099R forms can not be properly filed using Turbo Tax. In previous years Turbo Tax allowed taxpayers to input a generic numbers like 11-1111111 or 99-9999999, but not this year. If you report your pension on form 1040 as Other Income instead of 1099-R and you file a state tax return in a state with pension exclusion, there is a chance you'll be losing $100's or even $1000's of dollars in refunds. To get an exclusion on your state Tax return you'd have to file 1099-R on your Federal return. I spent more than 2 hours talking to the customer service, the person from customer service was very nice and tried to help with that issue, but the Tier 2 support person wasn't helpful at all. I think she didn't understand how serious this issue is to people receiving foreign pensions and filing state taxes. I suggested to provide a generic FIN for such filers like myself or provide a worksheet for state taxes so foreign pension income can be manually reported without filing a form 1099-R (if the IRS insists on using actual FINs). This is a serious issue preventing us from getting full refunds and e-filing our taxes.

Please fix this issue already!

ThomasM125

More than likely it is the IRS that will not allow for a generic ID number to be used for a substitute form 1099-R when you e-file a tax return. I believe most of us have experienced more cumbersome steps we have to take in order to access financial information online in recent years. This may be a reflection of that.

You can enter foreign pension income in TurboTax as though it was reported on a form 1099-R by putting in a substitute 1099-R entry and leaving off the federal ID number. Your pension income will be treated as such on your federal and state tax returns. As a work around, you can enter the pension income as other income on your federal tax return, e-file it and then enter it as a substitute form 1099-R to complete your state return and file it separately. You can also mail in your tax return in most instances.

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ParkNYCAuthor

This is not a solution at all. Even a substitute 1099-R form requires a valid FIN for e-filing.

My both returns have more than 50 pages each, I purchased Turbo tax to e-file my returns not to send paper copies. I've been doing this for years, except in 2023. Why can't Intuit consult this issue with the IRS and ask for generic FIN for situation like this? I believe there are many people with similar issue. Another solution is to provide a worksheet for state filers where a foreign pension deduction could be manually reported without form 1099-R. There are 100s of worksheets for deductions and adjustments available, why don't you provide one for this particular situation? Foreign pensions and retirements should be reported on forms 1099-R and not as Other Income. Many people who live in states with pension exclusion are losing a lot of money because of this.

@ThomasM125

confusedabd

@ParkNYC do you mind describing how do you handle your foreign pension? Mine is government foreign pension so per tax treaty can only be taxed in the other country. However, when I create 1099-R and substitute 1099-R my taxes owed goes up, and not sure how do I offset it. Since, I've already paid taxes on it in the country that gives the pension.

mariann9999

You will need IRS form 2555 - you can check for the entry with foreign pension. Then you will need to calculate what part of your pension may or may not be deductible - for that you will want to look up the "tax treaty" between the USA and the foreign pension. My interest was in Ireland and the tax treaty came right up and was very readable. Be aware that form 2555 has several pages to complete - pay attention to detail.

cmith50

Enter the generic EIN as 11-1111100 or 99-9999900 and that will fix the filing error.

DaveF1006

The best generic EIN is 99-0999999.

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Slovenska

Thanks @DaveF1006! Last year (2023 tax year) was the first year where I had this issue. In all years prior to 2023, I could enter the foreign "Payer Identification Number" or PIN from Canada and the e-filing was accepted. 2023 was the first year where it did not work so I had to mail in a paper version of my taxes, much to my annoyance. And this was after 5+ hours on the phone with Turbotax - no one could figure out what to do as my e-filing was repeatedly rejected. This year (2024 tax year), when I entered an PIN from Canada, my e-filed federal return was once again rejected. But then a few hours ago, I resubmitted after using the generic EIN that you suggested (99-0999999) and my federal return was accepted! Thanks so much. You really helped!