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Old 23.02.2014, 16:55
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US taxes: How to report employer second pillar contributions

Hi all,
My apologies if my question has been answered before on this forum.

I am aware that I need to report my employer's second pillar contributions on my US tax return as income. I want to track these contributions yearly so that when I cash out the pension fund upon leaving Switzerland, I only have to pay taxes on capital gains, interest, etc. that the fund earned.

I am not too familiar with accounting, but I believe that such a document would be known as some form of basis statement.

What is the best way to submit this type of statement to the IRS? Can I simply track yearly contributions from the employer in a Word document and include this with my tax return every year? Is there a special tax form I should submit?

Thanks for the help!
Kyle
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Old 23.02.2014, 17:06
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Re: US taxes: How to report employer second pillar contributions

I should clarify that I am still going to declare the employer's contribution as earned income on my 1040. I just want a way to ensure that the IRS doesn't tax me twice when I leave Switzerland and withdraw the pension.
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Old 23.02.2014, 17:42
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Re: US taxes: How to report employer second pillar contributions

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I should clarify that I am still going to declare the employer's contribution as earned income on my 1040. I just want a way to ensure that the IRS doesn't tax me twice when I leave Switzerland and withdraw the pension.
Looking at our return for last year, it looks like our accountant attached a series of statements to substantiate numbers, in this case, income that are not part of the normal wages -bonuses, pension contribution, stock vesting, etc. She does not submit other forms to the IRS - e.g., salary statements, pillar 2 statements. It's my understanding that the only non-IRS form that they want submitted is a W2, and if you don't have that, then you don't submit anything else.
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Old 24.02.2014, 08:06
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Re: US taxes: How to report employer second pillar contributions

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Looking at our return for last year, it looks like our accountant attached a series of statements to substantiate numbers, in this case, income that are not part of the normal wages -bonuses, pension contribution, stock vesting, etc. She does not submit other forms to the IRS - e.g., salary statements, pillar 2 statements. It's my understanding that the only non-IRS form that they want submitted is a W2, and if you don't have that, then you don't submit anything else.
Thanks for the reply. It helps a lot to know that I can simply write a statement that describes where the income that is not from normal wages.

I also learned that, technically speaking, the employer's contribution is not considered earned income, but rather unearned income, and therefore does not fall under the Foreign Earned Income Exclusion (see page 16 of Publication 54 here: http://www.irs.gov/pub/irs-pdf/p54.pdf).
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Old 24.02.2014, 08:18
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Re: US taxes: How to report employer second pillar contributions

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Thanks for the reply. It helps a lot to know that I can simply write a statement that describes where the income that is not from normal wages.

I also learned that, technically speaking, the employer's contribution is not considered earned income, but rather unearned income, and therefore does not fall under the Foreign Earned Income Exclusion (see page 16 of Publication 54 here: http://www.irs.gov/pub/irs-pdf/p54.pdf).
I think it's saying that amounts granted as pension (say, you are retired and you received some pension income) is not considered earned income (assuming you're talking about the bit around "Pension and Annuities"). However, contributed money to your pension is considered earned income.
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Old 24.02.2014, 08:24
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Re: US taxes: How to report employer second pillar contributions

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I think it's saying that amounts granted as pension (say, you are retired and you received some pension income) is not considered earned income (assuming you're talking about the bit around "Pension and Annuities"). However, contributed money to your pension is considered earned income.
Ah, thanks for the correcting me on this.
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Old 24.02.2014, 08:25
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Re: US taxes: How to report employer second pillar contributions

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Ah, thanks for the correcting me on this.
No problem! I have read a lot about this and go over our tax return with a fine tooth comb.

This guide has been mentioned elsewhere on the forum and is a bit out of date, but might be helpful to you: http://www.uscms.org/uscms_at_work/w...xes%202009.pdf
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Old 24.02.2014, 08:42
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Re: US taxes: How to report employer second pillar contributions

I think OP is talking about contributions, not distributions. One needs to look at reporting non-qualified pension plan Contributions, in which the IRS provides little or no guidance . Some tax professionals consider these as trusts, depends on your particular plan. If you need to report a trust, form 3520 will likely require a professional to fill out and submit.
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Old 06.04.2014, 15:50
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Re: US taxes: How to report employer second pillar contributions

I stumbled upon this sometime last year, which means I haven't included my employers contributions to the 2nd pillar... yet. I intended to start with my 2013 taxes, but have no statement from the account on how much my employer contributed. I do get a statement which states the balance, and some other projections on my pension upon retirement etc.

How have some of you here verified this? Do you add it to wages or someplace else?
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Old 07.04.2014, 09:18
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Re: US taxes: How to report employer second pillar contributions

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How have some of you here verified this? Do you add it to wages or someplace else?
Honestly, I haven't been able to verify with the IRS whether we should report 2nd pillar employer contributions, but I have found at least three sources online (all forums) that state we should. I reported it on line 21: Other Income on the 1040. It has an area where you can explain what the income is from. I haven't received noticed that my form was processed yet, so I don't know if this was correct or not.

I don't know if it helps you, but my payslip tells me the employer contribution for each month. It's listed as "Cot. périodique CP EMP" in Suisse Romande. I don't know what the German expression would be though.

I hope this helps!
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Old 07.04.2014, 13:54
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Re: US taxes: How to report employer second pillar contributions

Thanks for the help. I think I need to contact the bank where the account is managed. My payslip shows my contribution, but not my employers, and the account statement (even with some help from HR) does not appear to show my employers part of the contributions...
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Old 08.07.2014, 19:15
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Re: US taxes: How to report employer second pillar contributions

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I reported it on line 21: Other Income on the 1040. It has an area where you can explain what the income is from. I haven't received noticed that my form was processed yet, so I don't know if this was correct or not.
Sorry to bring this up again - obviously, I'm filing a bit later than most and hoping to get some updates based on the experiences of others.

Line 21 on Form 1040 (Other Income) should be used, from my understanding, to report income excluded under the Foreign Earned Income Exclusion. Form 2555 (FEIE) specifically directs you to mention excluded income on Line 21 of Form 1040 and to write down "Form 2555" next to it. Are you putting both amounts on one line? Or did you end up having to lump employer contributions to Pillar 2 with the gross income as reported on Line 7 of the 1040? (Putting Pillar 2 contributions on Line 7 would then imply that they are, indeed, considered earned income).

I feel like I've almost come to terms with this but not quite. (This is my first return filed from Switzerland, previous ones were all made in Germany where I was well under the exclusion threshold every year.)
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Old 11.07.2014, 08:23
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Re: US taxes: How to report employer second pillar contributions

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Are you putting both amounts on one line? Or did you end up having to lump employer contributions to Pillar 2 with the gross income as reported on Line 7 of the 1040? (Putting Pillar 2 contributions on Line 7 would then imply that they are, indeed, considered earned income).
I'm sorry for the late reply.

I've actually been in Switzerland for less than a year, which means, to my knowledge, I wasn't able to claim the foreign earned income exclusion on the 2013 tax return.

However, I did finally receive my refund. There was no complaint by the IRS about putting my employer's second pillar contributions on line 21. For more information, see page 16 in the section entitled "Foreign Earned Income" in the link that I posted already in this same thread: http://www.irs.gov/pub/irs-pdf/p54.pdf. I'm not 100% certain, but the it doesn't seem like the 2nd pillar contribution fits into any of the categories of what's listed as earned income. It seems to fall more under the category of "Social security benefit" even though we won't actually receive the money until we leave Switzerland.

So, in the future, I'll continue to put the employer's contributions on the "Other Income" line until they complain about it

I hope this helps some.
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Old 11.07.2014, 11:55
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Re: US taxes: How to report employer second pillar contributions

Thank you for replying though!!

I'm going to attempt to use TurboTax and see how they deal with the "Other Income" category.

By this point, I think I've read every (recent) thread on this topic on EF - from that research, I think you're right, you either put employer contributions on Line 7 and don't apply the income exclusion (shown in Line 21) to that amount, or put it on Line 21 somehow.
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