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

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Peenoi
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Joined: Fri Jul 27, 2012 8:19 pm

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

Post by Peenoi »

How is Pension Income from Government of Canada employment treated by CRA and by IRS?
Phil Hogan, CA
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Location: Victoria BC
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Post by Phil Hogan, CA »

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)
Cross-border investment advisor
http://philhogan.com
250-661-9417
Victoria BC
Peenoi
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Joined: Fri Jul 27, 2012 8:19 pm

Post by Peenoi »

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 »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

Phil, Cdb pensions are withheld 15% not 25% for US residents.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Phil Hogan, CA
Posts: 30
Joined: Fri Jan 08, 2010 12:11 pm
Location: Victoria BC
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Post by Phil Hogan, CA »

Yes, I incorrectly assumed a lump sum payment.

As Nelsona notes, periodic pension payments will be 15%.
Phil Hogan, CA, CPA (Colorado)
Cross-border investment advisor
http://philhogan.com
250-661-9417
Victoria BC
Peenoi
Posts: 8
Joined: Fri Jul 27, 2012 8:19 pm

Post by Peenoi »

Thanks
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