Taxation of CPP and SS as USC Resident of Canada

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
stewak2
Posts: 109
Joined: Mon Sep 18, 2006 2:47 pm

Taxation of CPP and SS as USC Resident of Canada

Post by stewak2 »

I am collecting CPP and will be collecting US SS, USC dual citizen resident of Canada.
My understanding is I am only taxed in Canada on *both* the CPP and US SS, and only 85% of the US SS is taxable in Canada.
( I am still commuting to work in US and have US-source employment income ).
Correct?
My non-USC, Canadian, spouse will being collecting half of my US SS when she reaches full SS retirement age.
Does same taxation rule apply? She will be taxed only in Canada, on 85% of SS amount?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Taxation of CPP and SS as USC Resident of Canada

Post by nelsona »

Correct.
The entire amount will be included in income, and then 15% of the SS is deducted on line 256.
btw, CRA considers SS payments (the taxable portion) as "splittable" pensions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
stewak2
Posts: 109
Joined: Mon Sep 18, 2006 2:47 pm

Re: Taxation of CPP and SS as USC Resident of Canada

Post by stewak2 »

Thanks.
For OAS clawback purposes, is it 85% of US SS or actual amount?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Taxation of CPP and SS as USC Resident of Canada

Post by nelsona »

The entire SS is considered when determining OAS clawback, since the deduction is past the income determination line.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
stewak2
Posts: 109
Joined: Mon Sep 18, 2006 2:47 pm

Re: Taxation of CPP and SS as USC Resident of Canada

Post by stewak2 »

Thank you. At least I don't have to change my spreadsheet. :-)
GAD53
Posts: 2
Joined: Sun Feb 01, 2015 7:03 pm
Location: United States

Re: Taxation of CPP and SS as USC Resident of Canada

Post by GAD53 »

As a resident of Canada you file with CRA. But, as a US citizen don't you file to the IRS too? regardless of your residency? I would think you do, and is any tax owing on the CPP and US SS income to the IRS?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Taxation of CPP and SS as USC Resident of Canada

Post by nelsona »

The treaty specifies that SS (and CPP/OAS) received by US citizens is not taxable in US, so they would file accordingly.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
GAD53
Posts: 2
Joined: Sun Feb 01, 2015 7:03 pm
Location: United States

Re: Taxation of CPP and SS as USC Resident of Canada

Post by GAD53 »

I guess the residency (US vs Canada) might make for a different situation, Y/N? (forgive my ignorance). The US Social Security website has a paragraph on "A CPP/QPP pension may affect your benefit". It goes on to say that-

"If you qualify for Social Security benefits from the United States based only on U.S. credits and a CPP/QPP benefit from Canada, the amount of your U.S. benefit will be reduced."

So I have 37 years of CPP contributions (getting confirmation), am living/working (not self employed) in the US -permanent resident status- due to fulfill my 40 credits in August 2020. I qualify to become a US citizen in June 2020. Wonder if it would be best to get my USC. If I don't, time spent in Canada needs to be carefully managed or I could lose my residency (Green Card) status and SS benefits. Would the formula of total CPP/SS benefits differ if I was a resident of Canada versus a resident of the US? Is there a way to determine how much my CPP benefit will reduce my SS?

Thanks in advance.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Taxation of CPP and SS as USC Resident of Canada

Post by nelsona »

Residency or citizenship does not impact eligibility for these programs. Residency affects taxation only.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply