TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Community

Employee

Question

I get a UK pension. I am now a US citizen. Can I deduct the contributions I paid into this pension from this income and can I deduct the contributions my employer paid

Forum|Forum|6 years ago
June 6, 2019
4 replies
0 views

I was born in the UK and have been permanently resident in the US and a US citizen for 20+ years. I now get a UK pension for the years I worked in the UK as a UK citizen before coming to the US. My questions are, for taxable income purposes, (a) can I deduct the contributions I paid into my UK pension from the taxable income of this pension and (b) can I also deduct the contributions my employer paid into my UK pension fund from the taxable income of this pension . Both the above contributions were made while I was in the UK (and a UK citizen).

TurboTax Premier Windows

DS30

Employee

It depends-

According to the IRS, your contributions and your employer's contributions to a foreign pension are not part of your cost if the contribution was based on compensation for services performed outside the United States while you were a nonresident alien and not subject to income tax under the laws of the United States or any foreign country (but only if the contribution would have been taxable if paid as cash compensation when the services were performed).

Therefore if the UK pension contribution were made tax free while a UK citizen, then you will not be able to claim any deductions in the US for these UK pension contributions.

Please click this link for more information on IRS - Foreign Pension and Annuity Distributions

If this is a UK governmental pension, you would be able to claim a treat exemption on From 8833 (statement to claim a treaty exemption) which you would attach to your mailed in tax return. You would still include the amount on your return under the social security section but you would also include a negative amount for this UK governmental pension on line 21 and the description should read "Tax exempt under US-UK tax treaty Article 17")

To enter the treaty exemption amount in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "other reportable income" in the search bar then select "jump to other reportable income". TurboTax will guide you in entering this information.

ChallengedinCAAuthor

Employee

Thanks. So if these contributions were made with after tax payments i.e. I had already been taxed in the UK on those contributions, then I could them as a deduction from the income, correct ?? ALso, as this is a UK Government Pension, do I report the income as Social Security income (using SSA-1099) or as Pension income

nickpbc

I'll soon be in the same boat as a US resident with a UK state pension coming up. I'd be particularly interested to get any opinions on whether it will be necessary to file form 8833 as previously mentioned in this thread, as not being able to file electronically for both federal and state returns seems like a painful burden. Looking at form 8833 instructions on the IRS site here https://www.irs.gov/individuals/international-taxpayers/claiming-tax-treaty-benefits it seems like there are 2 of several exceptions (below) that might apply. Any thoughts?

Exceptions

You do not have to file Form 8833 for any of the following situations:

You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.
The payments or items of income that are otherwise required to be disclosed total no more than $10,000.

ReneeM7122

Correct, you have to report a foreign defined benefit plan on form 8938 only if the total aggregate balance of foreign accounts reaches $10,000 during the year. You should use a currency calculator to get the USD amount. You also don't have to if you claim a tax treaty.

Should you need to enter the pension, here's what to do in TurboTax:

To enter foreign pension in TurboTax online program, you will you would NOT treat it as "other income," rather, you will create a mock form 1099-R.

Within your Personal Tax section, Under Retirement Plans, select the IRA, 401(k), Pension Plans (1099-R).

On screen, Your 1099-R, answer Yes and select Continue
Next screen, Choose your bank or brokerage, select I'll type it in myself
On the screen Tell Us Which 1099-R You Have, check the box

I need to prepare a substitute 1099-R and follow the prompts.

If your foreign issue does not have an ID number, you can try entering nine 9s. If errors occur due to this entry, you can enter the pension under Miscellaneous Income. The following link provides the info for both entries:

https://ttlc.intuit.com/questions/3687929-where-to-enter-foreign-pension-income-and-foreign-tax-cred...

Remember, if you have to go through this, then you may be eligible to claim the foreign tax credit. You'll need to complete Form 1116.

Here's how to get to Form 1116 for 2020:

Make sure you've entered all your foreign income.
From within your return, search for foreign tax credit and select the Jump to link in the search results.
Answer Yes to Did you pay foreign taxes in 2020 or have credits to use from a prior year?
Follow the instructions to get the credit or deduction.

There's a deduction available as well as well as a credit but in most cases, taking the credit works out better. We'll help you decide which one's best for you when you go through this section.

tomwilley

Hi Guys,

From reading the various replies, I'm pretty comfortable of what to do when reporting my wife's UK government pension on my tax forms and the need to submit form 8833. Where I'm falling down is how to actually fill in form 8833.

Specifically, what do folks enter for lines 2, 4, 5 & 6.

Help.

Tom

nickpbc

Probably you do not need to file form 8833 at all, as one of the exceptions for having to file it (see link above) explicitly states,

You do not have to file Form 8833 for any of the following situations:

You claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants

It would certainly be nice to get a definitive confirmation of this from an expert though, as use of form 8833 precludes electronic filing, which is a serious inconvenience.

cb114

If the total UK Government pension is under $10,000 do you even have to do the treaty add/minus thing?

AmyC

Employee

Yes, the amount of income is not the issue. It is reporting the income that is required. Once the income is reported, you want to make any deductions allowed. You can read more here which states, "You are subject to tax on worldwide income from all sources and must report all taxable income and pay taxes according to the Internal Revenue Code."

@cb114

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"