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Old 19.05.2019, 23:06
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How to create tax basis for pillar 2 contributions? (US taxes)

Hello, so it is another year of filing US taxes. Like a good citizen, I have been filing my taxes quite diligently. I know that I must report pillar 2a contributions (employee and employer).

I have been basically just reporting my gross income and then employee contributions as other income with pertinent description. I have also been reporting the annual growth as interest and paying taxes on that, as well.

Here are my questions:
1) I read somewhere in an old post recently that one should also actively create basis for this stuff and include it with your tax filing. This way when finally the pillar 2 distribution happens, I do not get taxed again. Is this correct? If so, can someone tell me how I can do this with Turbotax? Or is it just something that i should personally keep good records of so that I can point it out when the time comes.

2) Just out of curiosity, is the tax basis even relevant if I were to select the annuity based pension instead of one time pay off? Or you are just out of luck and end up getting taxed all over again?

3) Do you report the growth in pillar 2 as interest?
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Old 19.05.2019, 23:58
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Re: How to create tax basis for pillar 2 contributions? (US taxes)

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Hello, so it is another year of filing US taxes. Like a good citizen, I have been filing my taxes quite diligently. I know that I must report pillar 2a contributions (employee and employer).

I have been basically just reporting my gross income and then employee contributions as other income with pertinent description. I have also been reporting the annual growth as interest and paying taxes on that, as well.

Here are my questions:
1) I read somewhere in an old post recently that one should also actively create basis for this stuff and include it with your tax filing. This way when finally the pillar 2 distribution happens, I do not get taxed again. Is this correct? If so, can someone tell me how I can do this with Turbotax? Or is it just something that i should personally keep good records of so that I can point it out when the time comes.

2) Just out of curiosity, is the tax basis even relevant if I were to select the annuity based pension instead of one time pay off? Or you are just out of luck and end up getting taxed all over again?

3) Do you report the growth in pillar 2 as interest?
Note, I'm not an accountant, but offer advice from my only experiences only. Take it with a pinch of salt.

I'm also going to assume above that you meant "gross income and then *employer* contributions as other income with pertinent description", which is correct, rather than the employee contributions which are a part of your gross income.

1. This is correct and Turbotax won't help you. Instead, you are going to have to keep a running total of the amount of your contribution and your employer's to the pillar 2 pension each year, as well as the amount of US tax you paid on each. You should do likewise with the pillar 2 interest from you non-1099 1099 income. (P.S. I hope that one day the two nations will renegotiate their tax treaty to the modern standard of recognizing the other's retirement savings accounts, but the US and Switzerland are friendly, so not a top priority.)

2. Yes, the annuity-based pension would actually create more work as your tax basis would change with each payment, as money is withdrawn and the rest continues to accrue interest.

3. Yes. The growth unrelated to your/your employers contributions is reported as interest, as if you had a corresponding 1099 INT form. You can substitute your pension statement in your records.

Good luck!
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Old 20.05.2019, 09:24
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Re: How to create tax basis for pillar 2 contributions? (US taxes)

Hi OP,

Our accountant shows Pillar II contributions from employee and employer as an Addendum/Statement to our US tax return to explain Wages/Salaries composition. If and when we leave Switzerland, the tax basis/record is already established. Should interest accrue on the pension asset, we will pay the appropriate capital gain to the IRS upon our departure.

Good luck!
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