RECENT PENSIONER - "CONFUSED"

osprey_ron · Post by **osprey_ron** » Fri Apr 22, 2011 11:37 am

I retired from the Canadian Forces (CF) after 22 1/2 years of service on 14 Feb in order to marry a US citizen and move here. My immigration paperwork is underway and expect to receive permission to work shortly; and I expect I'll find a part-time job at some point this year to keep me busy and bring in some extra income.

I am in receipt of a monthly pension from the CF, deposited directly to my US bank account, which is taxed at source at 15% (due to the Treaty).

Q1...I will complete a final Canadian tax return next year for 2011...a Departure Return...as I earned employment income for the first part of 2011 but none will be required after that, correct?

Q2...Am I required to pay US taxes on my Canadian pension?

nelsona · Post by **nelsona** » Fri Apr 22, 2011 12:28 pm

1. Correct
2. You will report the income (and your Cdn wages) on your US retunr, but will get credit for teh taxes on your pension, and be able to exclude your Cdn wages.

osprey_ron · Post by **osprey_ron** » Fri Apr 22, 2011 12:56 pm

Thanks Nelson, much appreciated.

Both my wife and I are fairly adept at understanding items, but this whole cross-border tax is fairly confusing.

Do you recommend that we engage a cross-border tax consultant, especially for the first year, or is it "relatively" easy to accomplish on our own? Other than my pension, the only other issue will be my RRSP.

osprey_ron · Post by **osprey_ron** » Fri Apr 22, 2011 1:39 pm

BTW, if I have to pay US taxes (federal or state) on my pension, do I pay this on a quarterly basis?

JGCA · Post by **JGCA** » Fri Apr 22, 2011 6:40 pm

When you file your US 1040 and if tehre is tax owed the software will inform you of teh Quarterly tax installment needed to avoid an underpayment tax penalty

nelsona · Post by **nelsona** » Sat Apr 23, 2011 2:42 pm

Ron,

IRS (and state) expects you to pay your taxes throughout the year or will an underpayment penlty if you owe "too much" at year-end.

For the first year you should be fine, you can determine at that time if you need to make quartely payements, depending on how much more tax (if any) you owe to the feds. You will owe state tax, so you might want to pay those quarterly as soon as you move.