Pension income in foreign country for 1040

[Nishant]

I have couple of questions on foreign income to ensure that I filed correctly or I need to file 1040X

1) I have retirement income from India. Tax year in India is from April to March. I pay taxes in India and file return there. To include India income on 1040, I take 0.25 income of previous year + 0.75 income of current year as an approximation to convert Apr to Mar to Jan to Dec

2) I get income by way of pension and interest income. I cannot claim 2555 for pension income since I did not live in India during the year. I showed this income as wages and claimed taxes paid on 1116.

3) Income tax paid to India for interest income was shown as credit on 1116.

4) For part year salary income in Canada, prior to coming to US, I could use 2555. However CRA paid tax on Net rental income was claimed on 1116.

Please advise

[nelsona]

1. Why can you not report the actual income you receieved during the year. You should know this amount. You know what you recieved.
2. You can nnever claim pension income on 2555. Its not wages.
3. correct, but it should be the tax paid during 2009 only
4. correct. remember to correctly report the rental income in US as well.

[Nishant]

India banking is still largely manual system and we donot have a good way of keeping track of montly interest income unless we go there and get print out of transaction records. Due to inflation adjustment, pension amount also varies during the year frequently. I however I can access tax deducted by bank from IT website. But it is about 1 to 2 quarters late than due date and is not error free.
Therefore in case of query, I have India IT return as a proof of income rather than trying to match numbers. Hence the formula of 0.25/0.75 to change Apr/Mar year to Jan/Dec

2) Can you please clarify where foreign pension income is to be shown on 1040?

3) I have declared rental income on 1040 correctly. Due to depreciation, it has been and will be a negative net income so whenever I can bring down AGI below 150K, it helps.

[nelsona]

1) IRS rules are you report income for the tax year. You have until October of the following year to come up with correctes, so nothing you say is valid escuse.
2) Pension income is reported on the pension income line (16?) You can look at 1040.

[Nishant]

Nelsona- Your point is well taken.

I have a follow up question on that.

Page 30 of following link mentions that pension paid by Govt of India for past services is exempt from tax. Since I am not US citizen, it is applicable to me.

http://www.irs.gov/pub/irs-pdf/p901.pdf

Can you please comment on my interpretation?
I will have to call local treasury for state taxes.
Thanks

[nelsona]

If the pension is for past Indian Government job, then it is tax-free in US.