Reporting OAS & CPP/QPP and Form 8833
Moderator: Mark T Serbinski CA CPA
This provision is new for both QC and FED, as you say, but it is not as you described in your post. Only those who have CONTINUOUSLY since 1996 recieved SS and lived in canada during all this time.
So, it does not apply to anyone who lived outside canada at any time since 1996, not does it apply to anyone who began recieving SS in 1996 or later.
Please, try to stop adding misinformation to already existing threads.
So, it does not apply to anyone who lived outside canada at any time since 1996, not does it apply to anyone who began recieving SS in 1996 or later.
Please, try to stop adding misinformation to already existing threads.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Just thought that I'd belatedly add to this thread that the I.R.S. position on reporting CPP and OAS on Form 1040 appears to be contained in its "FAQs" about individual international tax matters, as follows:
Question:
"Are the Canada Pension Plan and Canadian Old Age Security benefits taxable? If they are, please tell me where they should be entered on Form 1040."
Answer:
"The taxation of payments received from Canadian retirement programs that are similar to the U.S. Social Security system receive special tax treatment due to an income tax treaty between the United States and Canadian governments. The way this income is taxed depends on the recipient’s residence.
The special tax treatment applies to payments receive from the following Canadian retirement programs: Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS)
If the recipient is a resident of the United States, the benefits:
are taxable only in the United States,
are treated as U.S. social security benefits for U.S. tax purposes, and
are reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040A) on the line on which U.S. social security benefits would be reported.
If the recipient is a U.S. citizen or lawful permanent resident (green card holder) who is a resident of Canada, the benefits are taxable only in Canada."
http://www.irs.gov/Individuals/Internat ... ax-Matters
This answer strongly suggests that, for U.S. citizens resident in Canada, CPP and OAS benefits, not being taxable in the U.S., are not reportable on Form 1040 at all. Not being taxable in the U.S., it would also seem to follow that Form 8893 is unnecessary, since it does not appear that any actual modification or overruling of any I.R.S. Code provision (to be cited at line 2 of 8893 box 2) is involved, nor has any such Code modification been cited or suggested in this thread.
Question:
"Are the Canada Pension Plan and Canadian Old Age Security benefits taxable? If they are, please tell me where they should be entered on Form 1040."
Answer:
"The taxation of payments received from Canadian retirement programs that are similar to the U.S. Social Security system receive special tax treatment due to an income tax treaty between the United States and Canadian governments. The way this income is taxed depends on the recipient’s residence.
The special tax treatment applies to payments receive from the following Canadian retirement programs: Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS)
If the recipient is a resident of the United States, the benefits:
are taxable only in the United States,
are treated as U.S. social security benefits for U.S. tax purposes, and
are reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040A) on the line on which U.S. social security benefits would be reported.
If the recipient is a U.S. citizen or lawful permanent resident (green card holder) who is a resident of Canada, the benefits are taxable only in Canada."
http://www.irs.gov/Individuals/Internat ... ax-Matters
This answer strongly suggests that, for U.S. citizens resident in Canada, CPP and OAS benefits, not being taxable in the U.S., are not reportable on Form 1040 at all. Not being taxable in the U.S., it would also seem to follow that Form 8893 is unnecessary, since it does not appear that any actual modification or overruling of any I.R.S. Code provision (to be cited at line 2 of 8893 box 2) is involved, nor has any such Code modification been cited or suggested in this thread.
We are all quite familiar with how SS/CPP etc are taxed for US citzizens in canada.
Your post is wondering about the need to file 8833 (not 8893 as you state).
It may interest you to know that 8833 is very rarely needed, even if the the treaty is being used. it is simply good practice to let them know why you are or are not doing such and such. this would be a good example. One does not need to quote the IRS regulation in order to produce a valid and instructive 8833 declaration.
However in this instance, the IRS is not quoting its regulations in the documentation you provided, when describing how they treat this income. They are in fact spelling out their treatment WITH THE TREATY APPLIED. "special tax treatment due to an income tax treaty" there is no IRS regulation which states Cdn residents don't report SS and CPP. Only the treaty spells this out, and this has changed at least 3 times in the last 25 years.
So 8833 may not be "needed", but not because IRS has a SS/CPP regulation on the books, but rather because it does not meet the income threshold for requiring 8833. .
Your post is wondering about the need to file 8833 (not 8893 as you state).
It may interest you to know that 8833 is very rarely needed, even if the the treaty is being used. it is simply good practice to let them know why you are or are not doing such and such. this would be a good example. One does not need to quote the IRS regulation in order to produce a valid and instructive 8833 declaration.
However in this instance, the IRS is not quoting its regulations in the documentation you provided, when describing how they treat this income. They are in fact spelling out their treatment WITH THE TREATY APPLIED. "special tax treatment due to an income tax treaty" there is no IRS regulation which states Cdn residents don't report SS and CPP. Only the treaty spells this out, and this has changed at least 3 times in the last 25 years.
So 8833 may not be "needed", but not because IRS has a SS/CPP regulation on the books, but rather because it does not meet the income threshold for requiring 8833. .
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thank you, Nelsona, for your thoughts, as well as for all your efforts on this forum generally, which I have found very helpful over the years. I would not be looking at the Form 8833 (not 8893 - my apologies) issue had an acquaintance not recently raised the question. I have now had a chance to look into the topic further, including other discussions on this forum.
In this thread, line 20 (Social Security) of Form 1040 is mentioned only as reportable as “0" with Form 8833 added to explain why. Other, later discussions suggest that CPP/OAS income be reported on line 20a with line 20b reported as “0", again with Form 8833 added for explanation. (I’ll just add at this point that a CPP/OAS income combination can exceed the 8833 threshold.)
With all respect, I do not believe Form 8833 is applicable at all, and, for Canadian residents, I disagree with the approach of reporting CPP/OAS income on Form 1040 (whether on line 20a or anywhere else). I am aware that some readers have been doing otherwise without complaint or difficulty. All I can say is that, as long as all taxable income ends up being reported coherently, I would be surprised if the IRS would ever complain about anything. I’ve never received an answer to any written communication and it cannot be bothered to provide the equivalent of a “notice of assessmentâ€. The only acknowledgment of a return even having been filed in the past was getting new forms the following year, and now there isn’t even that. Providing notification of tax return errors would obviously increase the IRS’s costs and workload exponentially.
I can say, for myself, that I have not reported CPP/OAS income on my 1040 returns for the past 5 years, nor have I filed any 8833s, also without comment from the IRS (which, as suggested, in itself signifies nothing). Specifically, I leave both 20a and 20b (and other inapplicable lines) blank, (or occasionally have put a zero in 20b) and I do not file an 8833.
I will attempt to explain my rationale. There being nothing entirely explicit mandating one approach over the other, this may be a bit lengthy, for which I apologise in advance. Except as otherwise mentioned, the circumstances discussed are those of a Canadian resident with CPP income filing a U.S. tax return.
It is agreed that, under the Treaty, CPP/OAS income is only taxable in Canada for Canadian residents. The corollary is that that same income is not taxable in the U.S. Being not taxable in the U.S., I suggest that CPP/OAS income is not reportable on a Canadian resident’s 1040. This is reflected, I believe, in the quoted IRS response to the question of where such income should be entered on a 1040: “If the recipient is a U.S. citizen . . . who is a resident of Canada, the benefits are taxable only in Canada.â€.
The suggested approach of reporting CPP etc. income on line 20a of 1040 appears, in my opinion, to confuse the reporting requirements of Canadian residents with those of U.S. residents. A U.S. resident, for whom CPP income is taxable only in the U.S., reports that income on 20a, which then leads into a worksheet to calculate the taxable portion. A Canadian resident, for whom such income is taxable only in Canada, reports that income on line 114 of his Canadian T1. CPP income is thus different from most other income in that most other income, being taxable in both countries, is reportable on both returns. What has been suggested is that the same CPP income reported on the Canadian T1 be also reported on 20a of the U.S. 1040, exactly as if it were taxable in the U.S., but instead of completing the worksheet calculation, an 8833 is attached to explain its shift to “0" on 20b.
I cannot find any support for the suggestion that, for Canadian residents, CPP income, despite the fact that it is not taxable in the U.S., is nonetheless reportable on the 1040. CPP being taxable only in Canada for Canadian residents, reporting it on 20a as if it were taxable in the U.S. also cannot be said to be in accord with the Treaty. To do so, in fact, might be viewed as the taxpayer taking a position, at least initially, that such income is outside the treaty (exactly the opposite of what is desired). To then, in effect, reclaim the position abandoned by having reported CPP/OAS income on 20a in the first place, an 8833 is filed. I cannot find any suggestion of such a procedure in any IRS instructions or literature. Rather the contrary.
The use of 8833 is governed by regulation (26 C.F.R. 301.6114-1) which includes the following:
"(c) Reporting requirement waived
(1) Pursuant to the authority contained in section 6114 (b), reporting is waived under this section with respect to any of the following return positions taken by the taxpayer:
. . .
(iv) That a treaty reduces or modifies the taxation of income derived from dependent personal services, pensions, annuities, social security and other public pensions, . . . "
https://www.law.cornell.edu/cfr/text/26/301.6114-1
As mentioned earlier in this thread, the IRS refers to this waiver elsewhere:
"Exceptions - You do not have to file Form 8833 for any of the following situations: . . .
. . . You claim a treaty exemption that reduces or modifies the taxation of income from . . . social security and other public pensions . . . â€
http://www.irs.gov/Individuals/Internat ... y-Benefits
This regulation contradicts any suggestion that the Treaty position on foreign public pensions must be pointed out to the IRS in each individual case by filing 8833, or that it is at least good practice to do so. I suggest that it is precisely because the Treaty is both recognised and applied across the board that the IRS unequivocally waives any 8833 reporting requirement for public pensions. Further, the only authoritative source of information concerning CPP/OAS income being the Canadian government, there should be no basis for any concern of any future misinterpretation by the IRS of such income being other than a public pension exempt from U.S. taxation. It would seem to me, on the contrary, that if anything is likely to raise eyebrows, it would be reporting non-taxable income as taxable only to then subtract it with a non-prescribed form.
I am aware that other sources exist which are in agreement with the 20a /8833 approach, and that reports exist of informal advice from the IRS which appear also to confuse the respective Treaty implications of Canadian and U.S. residency. However, given the explicit and definitive statements found in both the regulations and the Treaty, bolstered by other IRS references to the subject, those sources appear incorrect.
Since both approaches have the same end result, and the IRS is unlikely to complain, it may all, in the end, be much ado about nothing. The method I use, however, resolves, I believe, the contradictions found in IRS regulation and literature, to say nothing of the advantage of: One Less Form.
I hope this has been helpful, and express my appreciation for this forum, its participants, and their patience.
In this thread, line 20 (Social Security) of Form 1040 is mentioned only as reportable as “0" with Form 8833 added to explain why. Other, later discussions suggest that CPP/OAS income be reported on line 20a with line 20b reported as “0", again with Form 8833 added for explanation. (I’ll just add at this point that a CPP/OAS income combination can exceed the 8833 threshold.)
With all respect, I do not believe Form 8833 is applicable at all, and, for Canadian residents, I disagree with the approach of reporting CPP/OAS income on Form 1040 (whether on line 20a or anywhere else). I am aware that some readers have been doing otherwise without complaint or difficulty. All I can say is that, as long as all taxable income ends up being reported coherently, I would be surprised if the IRS would ever complain about anything. I’ve never received an answer to any written communication and it cannot be bothered to provide the equivalent of a “notice of assessmentâ€. The only acknowledgment of a return even having been filed in the past was getting new forms the following year, and now there isn’t even that. Providing notification of tax return errors would obviously increase the IRS’s costs and workload exponentially.
I can say, for myself, that I have not reported CPP/OAS income on my 1040 returns for the past 5 years, nor have I filed any 8833s, also without comment from the IRS (which, as suggested, in itself signifies nothing). Specifically, I leave both 20a and 20b (and other inapplicable lines) blank, (or occasionally have put a zero in 20b) and I do not file an 8833.
I will attempt to explain my rationale. There being nothing entirely explicit mandating one approach over the other, this may be a bit lengthy, for which I apologise in advance. Except as otherwise mentioned, the circumstances discussed are those of a Canadian resident with CPP income filing a U.S. tax return.
It is agreed that, under the Treaty, CPP/OAS income is only taxable in Canada for Canadian residents. The corollary is that that same income is not taxable in the U.S. Being not taxable in the U.S., I suggest that CPP/OAS income is not reportable on a Canadian resident’s 1040. This is reflected, I believe, in the quoted IRS response to the question of where such income should be entered on a 1040: “If the recipient is a U.S. citizen . . . who is a resident of Canada, the benefits are taxable only in Canada.â€.
The suggested approach of reporting CPP etc. income on line 20a of 1040 appears, in my opinion, to confuse the reporting requirements of Canadian residents with those of U.S. residents. A U.S. resident, for whom CPP income is taxable only in the U.S., reports that income on 20a, which then leads into a worksheet to calculate the taxable portion. A Canadian resident, for whom such income is taxable only in Canada, reports that income on line 114 of his Canadian T1. CPP income is thus different from most other income in that most other income, being taxable in both countries, is reportable on both returns. What has been suggested is that the same CPP income reported on the Canadian T1 be also reported on 20a of the U.S. 1040, exactly as if it were taxable in the U.S., but instead of completing the worksheet calculation, an 8833 is attached to explain its shift to “0" on 20b.
I cannot find any support for the suggestion that, for Canadian residents, CPP income, despite the fact that it is not taxable in the U.S., is nonetheless reportable on the 1040. CPP being taxable only in Canada for Canadian residents, reporting it on 20a as if it were taxable in the U.S. also cannot be said to be in accord with the Treaty. To do so, in fact, might be viewed as the taxpayer taking a position, at least initially, that such income is outside the treaty (exactly the opposite of what is desired). To then, in effect, reclaim the position abandoned by having reported CPP/OAS income on 20a in the first place, an 8833 is filed. I cannot find any suggestion of such a procedure in any IRS instructions or literature. Rather the contrary.
The use of 8833 is governed by regulation (26 C.F.R. 301.6114-1) which includes the following:
"(c) Reporting requirement waived
(1) Pursuant to the authority contained in section 6114 (b), reporting is waived under this section with respect to any of the following return positions taken by the taxpayer:
. . .
(iv) That a treaty reduces or modifies the taxation of income derived from dependent personal services, pensions, annuities, social security and other public pensions, . . . "
https://www.law.cornell.edu/cfr/text/26/301.6114-1
As mentioned earlier in this thread, the IRS refers to this waiver elsewhere:
"Exceptions - You do not have to file Form 8833 for any of the following situations: . . .
. . . You claim a treaty exemption that reduces or modifies the taxation of income from . . . social security and other public pensions . . . â€
http://www.irs.gov/Individuals/Internat ... y-Benefits
This regulation contradicts any suggestion that the Treaty position on foreign public pensions must be pointed out to the IRS in each individual case by filing 8833, or that it is at least good practice to do so. I suggest that it is precisely because the Treaty is both recognised and applied across the board that the IRS unequivocally waives any 8833 reporting requirement for public pensions. Further, the only authoritative source of information concerning CPP/OAS income being the Canadian government, there should be no basis for any concern of any future misinterpretation by the IRS of such income being other than a public pension exempt from U.S. taxation. It would seem to me, on the contrary, that if anything is likely to raise eyebrows, it would be reporting non-taxable income as taxable only to then subtract it with a non-prescribed form.
I am aware that other sources exist which are in agreement with the 20a /8833 approach, and that reports exist of informal advice from the IRS which appear also to confuse the respective Treaty implications of Canadian and U.S. residency. However, given the explicit and definitive statements found in both the regulations and the Treaty, bolstered by other IRS references to the subject, those sources appear incorrect.
Since both approaches have the same end result, and the IRS is unlikely to complain, it may all, in the end, be much ado about nothing. The method I use, however, resolves, I believe, the contradictions found in IRS regulation and literature, to say nothing of the advantage of: One Less Form.
I hope this has been helpful, and express my appreciation for this forum, its participants, and their patience.
"It may interest you to know that 8833 is very rarely needed"
Did anything in your post change this?
I didn't think so.
As to your question about reporting the actual income on 20a/b, since 1040 has a provision for reporting the taxable and non-taxable portion of SS (and CPP/OAS are reported as SS), I have no problem recommending consistently that one should report the income. Nothing in your post even hints that one should not "report" the income. your citations only discuss 8833.
Your conclusion, that because you cannot find explicit instruction to report the income that there is no such requirement is over-reaching in my opinion, in light of the fact that there does not exist explicit instruction NOT to report it, yet there is a 20a and 20b, which implies it is commonplace to report non-taxable monies on this line.
Please realize that Pension income is similarly treated: pension income that is not taxable in US by treaty (because, for example, it is not taxable in canada), is still reported on 16a.
So there are MULTIPLE instances on the 1040 itself where non-taxable income is reported, even income which is affected by treaty.
Cheers.
Did anything in your post change this?
I didn't think so.
As to your question about reporting the actual income on 20a/b, since 1040 has a provision for reporting the taxable and non-taxable portion of SS (and CPP/OAS are reported as SS), I have no problem recommending consistently that one should report the income. Nothing in your post even hints that one should not "report" the income. your citations only discuss 8833.
Your conclusion, that because you cannot find explicit instruction to report the income that there is no such requirement is over-reaching in my opinion, in light of the fact that there does not exist explicit instruction NOT to report it, yet there is a 20a and 20b, which implies it is commonplace to report non-taxable monies on this line.
Please realize that Pension income is similarly treated: pension income that is not taxable in US by treaty (because, for example, it is not taxable in canada), is still reported on 16a.
So there are MULTIPLE instances on the 1040 itself where non-taxable income is reported, even income which is affected by treaty.
Cheers.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
An issue I have encountered using TaxAct software is where to include the CPP/OAS amounts. Using the Federal Q&A and selecting the income tab, there is an option for "Taxable Social Security Benefits", but as I am a resident of Canada these benefits are not actually taxable; however by selecting the option, I am presented with a worksheet and a place to enter my SS Benefits from Box-5 of SSA-1099, which of course I did not receive. If I proceed to enter my Canadian benefits in this box, I have no further option to limit what is or is not taxable, and if I attempt to override the taxable amount on line 20B of the 1040, the software informs me I will not be able to file electronically, if I override.
Therefore I have not included any amount on 20A and included form 8833 explaining that I was excluding this amount, by treaty. Hopefully this is satisfactory;I haven't had any feedback from the IRS as yet.
Therefore I have not included any amount on 20A and included form 8833 explaining that I was excluding this amount, by treaty. Hopefully this is satisfactory;I haven't had any feedback from the IRS as yet.
I have now had the opportunity to look into this a bit further.
It’s been suggested that under Article XVIII of the Treaty (i.e. the “Convention between Canada and the U.S. with respect to Taxes on Income and on Capitalâ€), pension income is treated similarly to social security benefits (CPP/OAS). Paragraph 1 says, to paraphrase, that pensions may be taxed both in the recipient’s country of residence and in the country where the pension arises. Paragraph 3(a) then defines “pension†to exclude “any benefit referred to in paragraph 5". Paragraph 5 (social security benefits, i.e CPP/OAS) says, to paraphrase, that CPP and U.S. social security benefits are only taxable in the recipient’s country of residence. Pensions and social security benefits are thus treated fundamentally differently in that social security benefits (CPP/OAS) are only taxable in the recipient’s country of residence, whereas pensions are taxable both in the country of residence and the country of origin. Given this difference, I cannot see any basis on which to compare the requirements of line 16 with the issue at hand (being whether or not CPP/OAS benefits are reportable on line 20 by Canadian residents).
http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp
Given that, under the Treaty, CPP/OAS is taxable in the U.S. for U.S. residents, I agree that lines 20a and 20b are certainly relevant, but only for U.S. residents, which the IRS accordingly describes in its Publication 915 “Social Security and Equivalent Railroad Benefits†at p. 5 :
“Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the United States. If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later.†[p. 16]
www.irs.gov/pub/irs-pdf/p915.pdf at pp. 5 & 16
There isn’t the slightest hint in Pub. 515 of any intention on the part of the IRS that Canadian residents are to treat social security (CPP/OAS) benefits the same way. Instead, the IRS states on pp. 4 & 5 that benefits received by residents of Canada “are exempt from U.S. taxâ€, which is reiterated on p. 21:
“Benefits received by residents of Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania, and the United Kingdom are exempt from U.S. tax.â€.
www.irs.gov/pub/irs-pdf/p915.pdf at pp. 4, 5 & 21
The IRS discusses income which is “exempt†from U.S. tax in the Form 1040 Instructions at p. 20:
“Generally, you must report all income except income that is exempt from tax by lawâ€;
stated more specifically in the paragraph following:
“You must report all income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or by a tax treaty.â€
http://www.irs.gov/pub/irs-pdf/i1040gi.pdf at p. 20 (under “Foreign-Source Incomeâ€)
In short, the IRS has stated quite explicitly that:
(a) CPP/OAS income is, for Canadian residents, exempt from U.S. tax;
(b) income which is exempt from U.S. tax is not reportable; and
(c) the use of Form 8833 is waived for purposes of social security and other public pensions.
Based on the unequivocal statements found in official IRS publications, I suggest, in the interests of moving on, that it is reasonable to conclude that CPP/OAS income is not reportable on a Canadian resident’s 1040 (whether on line 20a or anywhere else) and Form 8833 is completely inapplicable.
I hope this has been helpful.
It’s been suggested that under Article XVIII of the Treaty (i.e. the “Convention between Canada and the U.S. with respect to Taxes on Income and on Capitalâ€), pension income is treated similarly to social security benefits (CPP/OAS). Paragraph 1 says, to paraphrase, that pensions may be taxed both in the recipient’s country of residence and in the country where the pension arises. Paragraph 3(a) then defines “pension†to exclude “any benefit referred to in paragraph 5". Paragraph 5 (social security benefits, i.e CPP/OAS) says, to paraphrase, that CPP and U.S. social security benefits are only taxable in the recipient’s country of residence. Pensions and social security benefits are thus treated fundamentally differently in that social security benefits (CPP/OAS) are only taxable in the recipient’s country of residence, whereas pensions are taxable both in the country of residence and the country of origin. Given this difference, I cannot see any basis on which to compare the requirements of line 16 with the issue at hand (being whether or not CPP/OAS benefits are reportable on line 20 by Canadian residents).
http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp
Given that, under the Treaty, CPP/OAS is taxable in the U.S. for U.S. residents, I agree that lines 20a and 20b are certainly relevant, but only for U.S. residents, which the IRS accordingly describes in its Publication 915 “Social Security and Equivalent Railroad Benefits†at p. 5 :
“Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the United States. If you receive social security benefits from Canada or Germany, include them on line 1 of Worksheet 1, shown later.†[p. 16]
www.irs.gov/pub/irs-pdf/p915.pdf at pp. 5 & 16
There isn’t the slightest hint in Pub. 515 of any intention on the part of the IRS that Canadian residents are to treat social security (CPP/OAS) benefits the same way. Instead, the IRS states on pp. 4 & 5 that benefits received by residents of Canada “are exempt from U.S. taxâ€, which is reiterated on p. 21:
“Benefits received by residents of Canada, Egypt, Germany, Ireland, Israel, Italy, Japan, Romania, and the United Kingdom are exempt from U.S. tax.â€.
www.irs.gov/pub/irs-pdf/p915.pdf at pp. 4, 5 & 21
The IRS discusses income which is “exempt†from U.S. tax in the Form 1040 Instructions at p. 20:
“Generally, you must report all income except income that is exempt from tax by lawâ€;
stated more specifically in the paragraph following:
“You must report all income, such as interest, dividends, and pensions, from sources outside the United States unless exempt by law or by a tax treaty.â€
http://www.irs.gov/pub/irs-pdf/i1040gi.pdf at p. 20 (under “Foreign-Source Incomeâ€)
In short, the IRS has stated quite explicitly that:
(a) CPP/OAS income is, for Canadian residents, exempt from U.S. tax;
(b) income which is exempt from U.S. tax is not reportable; and
(c) the use of Form 8833 is waived for purposes of social security and other public pensions.
Based on the unequivocal statements found in official IRS publications, I suggest, in the interests of moving on, that it is reasonable to conclude that CPP/OAS income is not reportable on a Canadian resident’s 1040 (whether on line 20a or anywhere else) and Form 8833 is completely inapplicable.
I hope this has been helpful.
K104XYZ:
Thank you for passing on your interesting missive from IRS Tax Law Assistance.
As mentioned in an earlier post, I have seen instances where informal advice from the IRS has failed to distinguish between Canadian and U.S. residency. I think the message you received fits roughly into the same category, although the writer has made a valiant attempt to merge the Treaty obligations of the country of residence with those of the originating country. (The writer does describe the proper use of the often ignored worksheet - if CPP/OAS were reportable, that is . . . )
What is missing from the message you received is any acknowledgement that, for Canadian residents, CPP/OAS income is, as stated in IRS publications, exempt from U.S. taxes and consequently not reportable at all - the key word being “exemptâ€. This seems to be a classic example of tax legislation having reached a point of such complexity that the IRS cannot give advice without substantial danger of contradicting itself, as well as being an example of the often reported phenomenon of receiving different answers from different IRS sources to the same question.
It’s been my experience, however, that official publications are more thoroughly vetted to ensure that they accurately reflect statute and regulation. If I were you, I’d be tempted to reply to the message, cite the contradictory information found in Pub. 915 and the 1040 Instructions quoted in my earlier post, and ask if CPP/OAS benefits are no longer exempt from U.S. taxation. If so, I’d ask what date that change occurred, and that the IRS please cite the statute, regulation, and/or treaty which accomplished that change.
Thank you for passing on your interesting missive from IRS Tax Law Assistance.
As mentioned in an earlier post, I have seen instances where informal advice from the IRS has failed to distinguish between Canadian and U.S. residency. I think the message you received fits roughly into the same category, although the writer has made a valiant attempt to merge the Treaty obligations of the country of residence with those of the originating country. (The writer does describe the proper use of the often ignored worksheet - if CPP/OAS were reportable, that is . . . )
What is missing from the message you received is any acknowledgement that, for Canadian residents, CPP/OAS income is, as stated in IRS publications, exempt from U.S. taxes and consequently not reportable at all - the key word being “exemptâ€. This seems to be a classic example of tax legislation having reached a point of such complexity that the IRS cannot give advice without substantial danger of contradicting itself, as well as being an example of the often reported phenomenon of receiving different answers from different IRS sources to the same question.
It’s been my experience, however, that official publications are more thoroughly vetted to ensure that they accurately reflect statute and regulation. If I were you, I’d be tempted to reply to the message, cite the contradictory information found in Pub. 915 and the 1040 Instructions quoted in my earlier post, and ask if CPP/OAS benefits are no longer exempt from U.S. taxation. If so, I’d ask what date that change occurred, and that the IRS please cite the statute, regulation, and/or treaty which accomplished that change.
rafa02:
I can’t really give you any advice, but can point out the information from IRS publications 915 and the 1040 instructions, quoted in my earlier posting, which I encourage you to confirm for yourself. If the information cited from the IRS is correct - which is that, for Canadian residents, CPP/OAS is exempt from U.S. taxes - there would be no need to enter it on your 1040 at all, since, being exempt, it would not be reportable.
I can’t really give you any advice, but can point out the information from IRS publications 915 and the 1040 instructions, quoted in my earlier posting, which I encourage you to confirm for yourself. If the information cited from the IRS is correct - which is that, for Canadian residents, CPP/OAS is exempt from U.S. taxes - there would be no need to enter it on your 1040 at all, since, being exempt, it would not be reportable.
CPP/OAS/SS are not taxable in US for CDn residents.
How you report it is up to you.
Budyy has decided one way, and is really expending a lot of effort to try to justify his way as the only way.
obviously it isn't.
He has learn however, as we have known for MANY years, that 8833 t=is often merely a courtesy, providing information to IRS, but rarely required. Glad he learned this old piece of information.
Exempt income is often reported on 1040, so I wouldn't be hanging my strategy on that.
How you report it is up to you.
Budyy has decided one way, and is really expending a lot of effort to try to justify his way as the only way.
obviously it isn't.
He has learn however, as we have known for MANY years, that 8833 t=is often merely a courtesy, providing information to IRS, but rarely required. Glad he learned this old piece of information.
Exempt income is often reported on 1040, so I wouldn't be hanging my strategy on that.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing