401k Pension income splitting

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nelsona
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Re: 401k Pension income splitting

Post by nelsona » Thu Apr 25, 2019 9:51 am

I'm not sure where you are getting any reference to me talking about non-US citizens etc. there is no citizenship angle here.

I'm talking about CRA's policy on pension splitting. While anyone is free to split qualifying pension income with their spouse (on their Cdn returns) it was originally thought that FTC's could not be split, since the tax was owed/paid by the one individual. This policy has in deed changed, so that even though one spouse paid all the US tax on a pension, a portion (apparently ANY portion) of the US tax can be given to the other spouse for this purpose only.

As I made clear however, a 401(k) and an IRA are viewed differently by CRA: 401(k) income CAN be shared, while IRA income cannot.

it will not be such an issue for couples that BOTH have income streams in future, but for many former TNers etc, only spouse may have had high earning potential in US, and thus has the bulk of the pension income.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Bumble
Posts: 14
Joined: Tue Apr 23, 2019 1:07 am

Re: 401k Pension income splitting

Post by Bumble » Fri Apr 26, 2019 3:21 am

Thanks much for the clarification, @nelsona.

I was reading your earlier comment: "If you are nota USC, I would stick to splitting Cdn pensions. If you are a USC ans spouse is not, because of the same tax mismatch for Cdn source pensions , I would avoid splitting altogether." (sic)

I was thinking that perhaps you mean the claiming of FTC (or not) has something to do with U.S. citizenship due to their worldwide income tax obligation. I guess you're saying the comment isn't valid any longer.

nelsona
Posts: 16040
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: 401k Pension income splitting

Post by nelsona » Fri Apr 26, 2019 7:46 am

If was directed at those with Cdn pensions, and not having to report these in US due to non-citizenship.

That actually still applies, but not in your case, if one spouse is USC and the other not, since many in this situation do not file in US for the non-USC spouse, and could create a FTC mismatch.

Not the subject of this thread however.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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