German Pension

Angka

Hello, I have dual citizenship and receive a very small German pension every month in the amount of approx. $ 70, depending on the exchange rate. My understanding is that because I already paid taxes when I worked in Germany I won't have to report this as taxable income. Is that correct?

I can't attend the live session for the entire time 9 - 5. How do I get an answer? Where should I look for your reply? Will you email me? Thank you!

KristineS

Hi Angka,

Thanks for your question. For U.S. citizens (which includes dual citizenship), the IRS requires all worldwide income to be reported on a U.S. tax return. This would include your pension from Germany. The U.S. has a tax treaty with Germany regarding social security benefits paid to U.S. citizens. Assuming your pension benefits are the equivalent of U.S. social security benefits, they are treated 'as if' you were receiving U.S. Social Security benefits and taxed in the same manner.

IRS Publication 915 has a worksheet on page 16 of 33 to help you determine how much, if any, of your German pension is taxable.

You may be able to take a credit or deduction for the taxes paid on your German pension.

Foreign income taxes paid can be taken as a credit on Form 1116 or as an Itemized Deduction on Schedule A. The Foreign Tax Credit is generally the better option since a credit will usually reduce your tax liability dollar for dollar. You may take a deduction for foreign taxes paid on line 6, Schedule A.

Our software only supports the foreign tax credit when the foreign income and taxes are reported on a K-1, Form 1099-INT or Form 1099-DIV. If you have paid foreign income taxes on income (such as your German pension) other than interest or dividend income reported on one of those two forms, FreeTaxUSA does not support that at this time.