Pension from Government of Canada employment, how????

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Peenoi
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Pension from Government of Canada employment, how????

Post by Peenoi » Fri Jan 11, 2013 8:07 pm

How is Pension Income from Government of Canada employment treated by CRA and by IRS?

Phil Hogan, CA
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Post by Phil Hogan, CA » Sat Jan 12, 2013 7:05 pm

The answer to your question depends on whether your a Canadian resident (maybe also US taxpayer) or US resident:

Canadian resident and US taxpayer: pension income is taxed on both tax returns and you'll claim a foreign tax credit on your US return for the taxes paid on the pension for Canadian purposes

US resident: Payer of pension should be withholdling 25% at source and you can use this tax to calculate your foreign tax credit for US purposes via form 1116.
Phil Hogan, CA, CPA (Colorado)
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Peenoi
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Post by Peenoi » Sat Jan 12, 2013 9:15 pm

Thanks....I should have been clearer, sorry!! The situation is: Pensioner will be US resident and a US citizen by the time pension income starts. Pension will be from government of Canada employment prior to moving to the US. Thanks again.

nelsona
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Post by nelsona » Sun Jan 13, 2013 6:36 pm

Pension income will be 100% taxed in US. Only WAGES from Cdn govt are tax-free in US.

So, your pension will be taxed 15% in canada, flat.

You will report 100% of the pension on your 1040, and get credit for the 15% tax you paid in canada.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
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Post by nelsona » Sun Jan 13, 2013 6:37 pm

Phil, Cdb pensions are withheld 15% not 25% for US residents.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Phil Hogan, CA
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Post by Phil Hogan, CA » Sun Jan 13, 2013 8:08 pm

Yes, I incorrectly assumed a lump sum payment.

As Nelsona notes, periodic pension payments will be 15%.
Phil Hogan, CA, CPA (Colorado)
Canadian and US Income Tax
http://www.hutcheson.ca/about-us/philip-hogan/
http://xborderpros.com
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Victoria BC

Peenoi
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Post by Peenoi » Mon Jan 14, 2013 5:45 pm

Thanks

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