Moving to US after retirement tax implication
Moderator: Mark T Serbinski CA CPA
Moving to US after retirement tax implication
My wife and I are planning on moving to the US after we retire. To Vermont or New Hampshire probably. We will both be receiving a pension from the Public Service Pension Plan. I know that federal income taxes will be held back on our pension payments. But what happen when we do our US federal and state taxes and the amount owed is less then what was withheld by CRA. Do we get the difference? By the way we are both dual Canadian and US citizens.
Your pensions and RRIF will have 15% held back flat taxed by canada. Your OAS and CPP will not be taxed by canada at all. You probably won't file a tax return in Canada at all (unless it is to try and lower the 15% pension tax -- see below). That will be you final tax in canada every year.
You will report all these on your 1040 (you should already be filing 1040 every year, right?).
The 15% Cdn tax will be a credit on your US return, you cannot use this or any other credit to lower your US tax below ZERO. Since your OAS and CPP will now only be taxed by US, you should expect to pay some US tax on these.
What you might be able to do is file a 217 return in canada, on which you report all your income, in order to determine if your pension can be taxed at less than 15%, but it unlikley that it will yield much lower rate than 15%. and, of course, lowering your Cdn tax may result in paying more to US.
You'll see how it works after the first full year in US.
But in either case, your taxrate in US has no effect on how canada taxes your pension, RRSP, etc.
Btw, your Provincial medicare will lapse as soon as you move. Do you have other healthcare insuance lined-up?
You will report all these on your 1040 (you should already be filing 1040 every year, right?).
The 15% Cdn tax will be a credit on your US return, you cannot use this or any other credit to lower your US tax below ZERO. Since your OAS and CPP will now only be taxed by US, you should expect to pay some US tax on these.
What you might be able to do is file a 217 return in canada, on which you report all your income, in order to determine if your pension can be taxed at less than 15%, but it unlikley that it will yield much lower rate than 15%. and, of course, lowering your Cdn tax may result in paying more to US.
You'll see how it works after the first full year in US.
But in either case, your taxrate in US has no effect on how canada taxes your pension, RRSP, etc.
Btw, your Provincial medicare will lapse as soon as you move. Do you have other healthcare insuance lined-up?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
You will have a US private health care plan? If not, then I would be nailing down what the limits are. Cdn plans are not designed to cover those with no Provincial health coverage.
As to US medicare, you are only eligible if you or spouse worked in US for 10 years. There may be other eligibility exemptions, but I'll let you figure that out.
But I would not be counting on any public medicare from US unless you have worked in US
As to US medicare, you are only eligible if you or spouse worked in US for 10 years. There may be other eligibility exemptions, but I'll let you figure that out.
But I would not be counting on any public medicare from US unless you have worked in US
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best