Filing in Canada?

[pastorglen]

We are dual citizens - worked 21 years in Canada before returning to the US twenty years ago. I have been collecting Canada Pension for four years (and having it deposited in a Canadian bank account). We have been claiming it on our US return. Do we need to go back and file in Canada for those four years and into the future?

Also, I have an employer (Canadian) pension annuity that can begin paying me monthly either this year or next year, when I turn 65. The former employer is closing their pension plan and rolling all of us close to retirement out to an annuity. I plan to keep some or most of those funds in Canada, too. Will we need to file in Canada and the US both?

[nelsona]

CPP (which is what I presume you mean) is not taxed in canada for US residents. So you are good there.

Also, OAS (yes you are entitled to reduced OAS), like CPP the tax treaty makes these not taxable in canada at all, just reportable on US tax return when you get it.

Private Pension income however, from canada is supposed to have 15% tax withheld at source for US residents. I presume that your pension managers are aware that you live in US, and will be doing this.

If that is done correctly, then nothing has to be filed with CRA.

You need to report this income on your US return, and claim the 15% (for the private pension)as a credit, using form 1116. The tax treaty lets you treat CPP and OAS exactly like SS, meaning you only report 85% of it to IRS.

Be aware that when it comes time to collect SS benifits, your monthly am ount will be reduced slightly based on the work you did in canada. You will need to tell them about this money even if they don'y ask about it.

[nelsona]

Just to clarify:
on CPP and OAS taxation by IRS: You do report all of it, of course. I meant that a maximum of 85% is taxable by IRS, just like for SS benefits.