Reporting Pensions--so confused!

I have been filing my taxes on my own for years. However, I have only just realized I need to report my UK pension on my taxes. This has further implications for FBAR reporting too, though I'm not sure how far back to file. My plan is a DB/DC mix. I can see the DC value with employer and employee monthly breakdowns so can add that up fairly easily for reporting on FBAR. The DB I can see annual income and lump sum income values per year, but don't know how to add this all up. Would I only report the annual income value for year end? Or include the lump sum income? I've read old threads and there seems to be mixed opinions on how to report the DB income.

I'm thinking about paying someone to do my US taxes as it drives me batty every year. But I don't want to have to pay a fortune to include previous years I need to correct if it's actually simple to figure out pension value. The FBAR itself I never found hard as a form.

Also, based on the above, do I need to amend my US taxes too? I stupidly thought I didn't report my UK pension until I started receiving distributions so just left it off. It wouldn't change what I owe for taxes as I use the Foreign Earned Income Exclusion.

Have you retired? If you are drawing the pension, you do need to report it. If you are still employed, there are different ways to deal with it. Even if you have done it wrong, it may not change your US tax liability. It may not be a serious problem.

@Weller No, not even close to retirement so that's why I originally thought I didn't need to report the UK pensions, as I'd heard on UK taxes you do not report US pensions until you start taking money from the funds. I've read through a lot of old threads on UK pensions and it sounds like some reporting needs to take place, at least for DC pensions and that some argue DB pensions should get reported too.

Everytime I think I've got taxes cracked something new comes up, but I want to get it all squared away as my taxes will only get more complicated as I get older so I need to be getting the basic things right at least.

You need to distinguish between informational reports like the FBAR and how you include pension contributions for your taxable income. For the FBAR, reporting the defined contribution pension is relatively straightforward. It's sometimes hard to figure the maximum amount but a decent estimate should suffice. For a defined benefit pension, the value is very hard to define and it's not clear that it should be reported - opinions differ on this.

I never reported my db pension on an FBAR or tax return until after I started receiving distributions then I reported and paid taxes through the IRS.

I never reported my db pension on an FBAR or tax return until after I started receiving distributions then I reported and paid taxes through the IRS.

Thanks, @durhamlad ! I was hoping you'd come along as I've learned a lot from your previous posts (and also replies to some of my posts over the years). The pension I have also has a DC component which kicked in for me in 2022. I can see employer and employee contributions on my statements. From what I've read you aren't liable to report the employer contributions, so I'm not sure if that means I just add up my contributions, or if I play it safe and just report the total (employer and employee contributions) in the DC part of my pension on the FBAR. It's the USS scheme which has been a hot mess and changed a lot over the past five years or so, so I have a hard time keeping up with what it's doing. Much prefer the reliability of my Vanguard brokerage account.

I really want to be able to complete the FBAR on my own if I can. I just need to understand the pension bit and it'll be easy enough as calculating the max value of my other accounts is very simple.

Thanks, @durhamlad ! I was hoping you'd come along as I've learned a lot from your previous posts (and also replies to some of my posts over the years). The pension I have also has a DC component which kicked in for me in 2022. I can see employer and employee contributions on my statements. From what I've read you aren't liable to report the employer contributions, so I'm not sure if that means I just add up my contributions, or if I play it safe and just report the total (employer and employee contributions) in the DC part of my pension on the FBAR. It's the USS scheme which has been a hot mess and changed a lot over the past five years or so, so I have a hard time keeping up with what it's doing. Much prefer the reliability of my Vanguard brokerage account.

I really want to be able to complete the FBAR on my own if I can. I just need to understand the pension bit and it'll be easy enough as calculating the max value of my other accounts is very simple.

Completing the FBAR is pretty straightforward and easily done yourself. I would report the total value, employer and employee contributions.  It is only a report, no taxes until you start making withdrawals so better to over report rather than underreport, although I would think for sure it is the total value that should be reported, after all that total amount is actually yours assuming you are fully vested in the plan.

@durhamlad Okay, that makes sense. That does just push me over the 10K reporting threshold for 2022 if I've calculated correctly (max value of EACH foreign account during the year and then add up those max values for your TOTAL amount to see if you hit $10K+). Am I right in thinking I shouldn't be scared into filing through a tax preparer just for a single late FBAR? I was just going to explain my reason for late filing on the FBAR form and then stay up to date from now on now I know to count the DC part of my pension. Already prepared for 2023 as I knew I needed to file the FBAR this year.

@durhamlad Okay, that makes sense. That does just push me over the 10K reporting threshold for 2022 if I've calculated correctly (max value of EACH foreign account during the year and then add up those max values for your TOTAL amount to see if you hit $10K+). Am I right in thinking I shouldn't be scared into filing through a tax preparer just for a single late FBAR? I was just going to explain my reason for late filing on the FBAR form and then stay up to date from now on now I know to count the DC part of my pension. Already prepared for 2023 as I knew I needed to file the FBAR this year.

No problem filing a late FBAR yourself. I believe there is a box on the FBAR where you can state why it is late.

Would I need to amend my U.S. federal return for 2022? My employer contributions to the defined contribution part of my pension exceed my contributions, and the overall amount is very tiny as the pension was fully a defined benefit pension until 2022 so it hasn’t had time to build up much value.

Would I need to amend my U.S. federal return for 2022? My employer contributions to the defined contribution part of my pension exceed my contributions, and the overall amount is very tiny as the pension was fully a defined benefit pension until 2022 so it hasn’t had time to build up much value.

I would not have thought so. Unless the amount of tax you owe has changed then no problem really.

@durhamlad , thanks for the advice! If I did ignore anyone it wasn't intentional. The earlier post from Weller clarified things for the FBAR reporting, but I was still unsure if I needed to take any further steps for my federal return. I have read old threads too but advice varied and tax laws can change, so figured I would ask. [Just to add, I'm not sure if it's the forum or you that's written "you are ignoring this post" but it's showing up on a few replies--I don't think it was before so sorry if I'm sounding completely bonkers. Just wanted to be sure everyone knew I was indeed paying attention to the helpful advice and appreciated it]

Thanks to both you and Weller for your very helpful advice! I'm taking the stance of reporting FBAR using my estimated DC contributions and leaving things off the federal return until the point I begin taking distributions--thankfully not for a very long time. In any case, FBAR is all submitted and up to date now. Phew!

You need to distinguish between informational reports like the FBAR and how you include pension contributions for your taxable income. For the FBAR, reporting the defined contribution pension is relatively straightforward. It's sometimes hard to figure the maximum amount but a decent estimate should suffice. For a defined benefit pension, the value is very hard to define and it's not clear that it should be reported - opinions differ on this.

@Weller , just want to apologize for missing out on this post. I've been juggling two small children and trying to catch up on FBAR, which meant I was often quickly checking replies on my phone and just missed this. I chose to just report the DC contributions as that is something I can clearly calculate and, as you say, opinions vary anyway for DB pensions. I'm still not confident about how to handle the pension on the federal return, but it seems like I might be okay to leave it off for now until I begin drawing money from it, which won't be for a good long time.

In my official capacity of "some guy on the internet", I think you've done the right thing.

In my official capacity of "some guy on the internet", I think you've done the right thing.

Thanks!  Obviously I read other things too, but it's helpful hearing from fellow expats. Now it's time to sort out self assessment and federal taxes!