OAS/CPP and 8833

[GlobalCitizen]

I'm helping a friend out. Taxpayer is a dual US/CDN citizen residing in Canada. Received CPP/OAS in 2023. I'm just trying to figure out how to report this properly on the US 1040 return.

After reading up on this in the forum, my understanding is as follows:

- Enter the total amount received on line 6a.
- Enter '0' on line 6b.

File a Form 8833 to explain the treaty exemption. This is where I would like a bit of help to make sure I'm doing this right. The language in the treaty is quite confusing. Here's what I have for the 8833:

Form 8833:
1. a. Canada
b. XVIII

2. 26 U.S. Code § 86

3. Government of Canada - no US Address

4. The taxpayer is a natural person within the meaning of Treaty article XXIX 2a

5. Tick the box "no"

6. Taxpayer is a resident of Canada and therefore the amount listed on line 6a of the 1040 return is subject to tax only in Canada.

Article XVIII.5 of the treaty states:
5. Benefits under the social security legislation in a Contracting State (including tier 1 railroad retirement benefits but not including unemployment benefits) paid to a resident of the other Contracting State shall be taxable only in that other State, subject to the following conditions:
(a) a benefit under the social security legislation in the United States paid to a resident of Canada shall be taxable in Canada as though it were a benefit under the Canada Pension Plan, except that 15 per cent of the amount of the benefit shall be exempt from Canadian tax; and
(b) a benefit under the social security legislation in Canada paid to a resident of the United States shall be taxable in the United States as though it were a benefit under the Social Security Act, except that a type of benefit that is not subject to Canadian tax when paid to residents of Canada shall be exempt from United States tax.

[nelsona]

Looks fine.
On Line 1b simply put XVIII.5, and don't put any verbiage from the treaty in part 6,

Line 4 is N/A. You aren't using any LOB article.

I would clarify in 6 that "the income listed on 1040 line 6(a) is CPP/OAS, and is therefore not taxable in US for a Cdn resident."

[GlobalCitizen]

Thank you Nelsona, I appreciate your help!

Would these payments be a "foreign trust" for purposes of the box on schedule B? This person has no RRSPs etc, so no other reason to tick that box.

[nelsona]

no

[GlobalCitizen]

Thanks!