What is the best method for reporting UK teacher pension in the FreeTaxUSA?
The 2025 IRS Form 1040 instructions page 23 stipulates the following:
Report distributions from foreign pension plans on lines 5a and 5b.
This is the way I have done it (manually for years), however in FreeTaxUSA the only way I can access those lines (5a and 5b) is by creating a fake 1099-R.
Is this the recommended method for reporting foreign pension income/distributions or is there some other way to get that number placed on lines 5a and 5b as called for by the IRS instructions?
Best Answer
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Hello,
You're absolutely correct that the IRS instructions require foreign pension distributions to be reported on lines 5a and 5b. Unfortunately, our software currently requires a 1099-R form to populate those lines, even though foreign pensions don't generate a 1099-R.
Creating a manual 1099-R entry is the correct workaround in FreeTaxUSA to properly report your foreign pension income on the appropriate lines. When you create this entry, you'll want to ensure the amounts are accurately reflected on lines 5a (total distribution) and 5b (taxable amount), consistent with how you've reported it in prior years and in accordance with any applicable tax treaty provisions.
While I understand this feels like creating a "fake" form, you're actually using the software's available input method to achieve the correct tax form result. The important outcome is that your foreign pension distribution appears on the correct lines of your Form 1040, which this method accomplishes.1
Answers
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I do it by going to Income/Your Retirement Income/Add 1099-R
It is then straightforward to complete except that you will not have a Payer's ID Number. I use 99-9999999 and that works.
Then at the bottom I check Nonstandard 1099-R
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Excellent and also funny. As a test the other day I did the exact same 99-9999999 and Nonstandard box check. So, Great Minds? Anyway, thanks for the input. My concern was using "bogus data" in the form, but after further research I found that the only 1099-R forms that the IRS accepts are from the issuers of said forms, the IRS doesn't ask for nor accept 1099-R's from filers due to redundancy as well as errors that they might introduce. Thus, any "bogus data" in this situation lives in the TaxFreeUSA database only and doesn't get submitted to Uncle Sam.
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I agree that using the word "fake" was probably not the best choice, I should have used "substitute" or " substitute for handwritten." Anyway, thanks for the comprehensive and informed response.
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I do it by filling out the form at Your Retirement Income. In the Address Type there is a drop down box which includes "foreign address". The only issue is that you do not have a Payer's ID Number so I use 99-9999999. Then at the end I check Nonstandard 1099-R.
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What is the distribution code you selected? Or it doesn't really matter?
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I don't think it matters, as per one of my replies above, :
"after further research I found that the only 1099-R forms that the IRS accepts are from the issuers of said forms, the IRS doesn't ask for nor accept 1099-R's from filers due to redundancy as well as errors that they might introduce. Thus, any "bogus data" in this situation lives in the TaxFreeUSA database only and doesn't get submitted to Uncle Sam."
So I just used the distribution code that come on most 1099-R's, i.e., "7",
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Choose the one that applies to your payment. In my case it was "7"
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This is the first year I need to try this workaround. In my case, it's from a French pension. I've read elsewhere the FreeTaxUSA can only support UK and German foreign pension income, but I'll give this a whirl.
This may or may not entail mailing in a paper tax return, but not a deal breaker for me. Also, I'm not sure whether the (as I understand it, mandatory) IRS Form 4852 gets generated. Maybe this is what "can only support UK and German" actually means. Thanks everybody for the previous answers!
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