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How do you report pension received from Canada by a US citizen residing in US on your 1040?

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Level 1
 
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8 Replies 8
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Level 11
Level 11

If you put it on l040 as other income it will be taxed as ordinary income which it is not. 

If the recipient is a resident of the United States, the benefits:

  • are taxable only in the United States,
  • are treated as U.S. social security benefits for U.S. tax purposes, and
  • are reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040A) on the line on which U.S. social security benefits would be reported.

We have a treaty with Canada and pensions are given special tax treatment, and not treated as ordinary income.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Level 15

@nav Assuming it is Canadian pension and you would like to e-file the return, you would make the input for the pension by scrolling down to the bottom of that section for Foreign Employer Pension.  Check the box for Compensation not reported on 1099, and select Canada from the dropdown for Country code if work not performed while residing in the U.S.

I also assumed you have double checked the type of pension payment it is, to determine the proper amount of tax Canada may (or may not) assess under the relevant treaty protocol and article and, hence, the extent to which FTC can be claimed on the US return.

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Still an AllStar
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Level 11
Level 11

@itonewbie your right and thanks for getting involved, I was in kind of a rush, but just trying to get original poster to do research his self. I get very few of those and make sure I know the kind of pension it is, and go from there. Would be unfortunate for his client just to put it on other income as that is probably not correct. Again thanks itonewbie

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Level 11

If it's not ordinary income, what is it? I always treat it like SSI, maximum 85% of which is taxable as ordinary income.

** I'm still a champion... of the world! Even without The Lounge.
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Level 11
Level 11

@Accountant-Man That the point, original poster was advised to just put on other income, but it ALL is not, only the taxable part.

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Level 15

@Terry53029 That blog doesn't even scratch the surface of the related articles in the DTA.  That's great for SEO that draws potential customers but I wouldn't rely on that as an international tax professional.

@nav There is a lot more to consider.  You may like to refer to a recent discussion for what you should take into account: https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/canada-form-nr4/00/5309...

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Still an AllStar
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Level 15

I would just enter as "Other Income" which can be found in the same section as Social Security. 

  1. Go to the Input Return workspace (Enter Data in TY2012 and prior)

 

  • Click the Income section to expand

 

  • Select the first SS Benefits, Alimony, Misc. Income screen

 

  • For TY2012 and prior returns, click the gray SS Bene., Misc. Inc. button at the top of the screen

 

  • Scroll down to the Alimony and Other Income section

 

  • Make your entry in the Other Income (Click on button to expand) input field.

ex-AllStar
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