If you received a foreign pension, you first must determine whether the foreign pension is taxable. TaxAct® has no process to determine this; please review the IRS links below to make this determination:
Once you determine the amount of foreign pension that is taxable, there are two places you can enter the pension amount. In a few instances (based on treaties) the pension benefits can be entered as Social Security benefits. However, the most common place to enter foreign pension benefits is on the worksheet FEC Foreign Employer Compensation and Pensions
To enter the foreign pension benefits in TaxAct on the FEC worksheet:
- From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
- Click Retirement Plan Income to expand the category and then click Foreign pension distributions
- Click Add to create a new copy of the form or click Review to review a form already created
- The program will proceed with the interview questions for you to enter or review the appropriate information
On the screen titled Foreign Employer Compensation and Pensions - Payer's Name, you must enter the name of the foreign country in the box Payer's Country Code. If you do not enter the foreign country, you will receive a Red Alert titled FEC - Employer Information during the electronic filing steps, which will prevent you from being able to e-file your tax return.
The FEC worksheet is not an IRS form, but is a worksheet only in the TaxAct program used to collect the information and transfer it to the appropriate place on the return. All information entered on the worksheet is transmitted with the return if it is electronically filed. If the return is paper filed, there is no documentation required to be sent with the return. The IRS will contact the taxpayer if they need any additional information on the amount entered on the return for foreign retirement income. If you would still like to print the FEC worksheet to mail with the return, the following steps will allow you to do that.
- Sign in to your TaxAct Online return
- Click the My Return button in the top right corner. On smaller devices, click the profile icon in the upper right-hand corner
- Click Print Center, and then click Custom Print
- In the bottom section, check the box next to Federal Form 1040/1040NR FEC
- Click the Print button and then click the PDF link. The item will appear in a PDF read-only format. At that time you can click the printer icon on the screen to actually print the worksheet, or close the window without printing.
NOTE: If, after you click Custom Print in Step 3 above, you see the message "No forms (or documents) available to print," you will need to click View/Pay your return fees which will bring you through the Paper Filing steps. Continue through those screens until you have processed the payment for your product fees.
- Start your TaxAct Desktop program
- Click the Forms button in the top left corner
- Expand the Federal folder and then expand the Documents Received folder
- Click '+' next to Form 1040/1040NR FEC - Foreign Employer Compensation and Pensions to expand the section and then double click the copy you wish to print
- Click the Printer icon in the toolbar
In the print dialog box that appears you are able to choose if you wish to send the output to a printer or a PDF document. If you wish to only print preview the document, check the Print Preview box. Once the print preview window opens, click the Print button to actually print the document.