Canadian/US tax implications for receiving Canadian pension

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
jcorm
Posts: 4
Joined: Thu Nov 19, 2020 3:51 pm

Canadian/US tax implications for receiving Canadian pension

Post by jcorm » Thu Nov 19, 2020 4:04 pm

I am a Canadian and US citizen living in the USA. My pension is with the City of Winnipeg and I was told they'd be withholding 25% tax on the Canadian side.
1. Is there any way to decrease the amount of Canadian tax withheld?
2. Will I get taxed on the US side as well? I can't seem to find a concrete answer.

Thanks in advance.

marvinsilva
Posts: 18
Joined: Mon Jan 26, 2009 11:37 pm
Location: Arizona

Re: Canadian/US tax implications for receiving Canadian pension

Post by marvinsilva » Thu Nov 19, 2020 6:21 pm

My wife and I are receiving CPP with direct deposit in Royal bank with zero withholding. I used CRA tool and our taxes are zero for pension income for non residents leaving in the USA.
Nica

jcorm
Posts: 4
Joined: Thu Nov 19, 2020 3:51 pm

Re: Canadian/US tax implications for receiving Canadian pension

Post by jcorm » Thu Nov 19, 2020 9:10 pm

Thanks for your post. I don't have a Canadian bank account which is maybe the issue, I don't know. No Canadian bank will let me open an account without proving my identity in person and with Covid, I won't be able to travel to Canada any time soon. What CRA tool are you referring to?

Thanks!

nelsona
Posts: 16588
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian/US tax implications for receiving Canadian pension

Post by nelsona » Fri Nov 20, 2020 3:10 pm

Be careful. CPP is not private pension. Pensions like our poster is talking about will be subject to 15% withholding and will also need to be reported on one's US tax returns, with credit given for Cdn tax withheld.

CPP is by treaty not taxed in canada for US residents, but taxed only in US. Not so for other pensions, RRSPs, etc.

The Cdn banking isssue, which has nothing to do with how your pension will be taxed, is a logistical problem at any time. You could aks that they send you the cheques to your US address, and then cash them in US (this will be more costly). This will not affect the withholding, which is 15%.

The advice given here for 20 years has always been to keep one Cdn bank account and one Cdn credit card when you leave Canada, for exactly these types of situations,.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 16588
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian/US tax implications for receiving Canadian pension

Post by nelsona » Fri Nov 20, 2020 3:11 pm

25% withholding would be the case if you are taking a lump-sum (or cashout) form your pension.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 16588
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian/US tax implications for receiving Canadian pension

Post by nelsona » Fri Nov 20, 2020 4:26 pm

Here is the url for the NR tax calculator. Yours would be considered an RPP
https://www.canada.ca/en/revenue-agency ... aimer.html
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jcorm
Posts: 4
Joined: Thu Nov 19, 2020 3:51 pm

Re: Canadian/US tax implications for receiving Canadian pension

Post by jcorm » Fri Nov 20, 2020 5:13 pm

Thank you so much! I appreciate the information. When we moved from Canada 30 years ago, retirement seemed far, far away. ;-) I wish someone had told me then to keep a bank acct open. We live and learn.

Thanks again.

nelsona
Posts: 16588
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian/US tax implications for receiving Canadian pension

Post by nelsona » Fri Nov 20, 2020 9:49 pm

Just so you know, when you collect CPP/OAS, Service Canada will send it to your US bank, in US dollars at the current exchange. No need for Cdn bank for that.

If you haven't needed a Cdn bank account for these past 30 years, I wouldn't feel too much regret. Maybe the City can work something out for you to make the transfer easier.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jcorm
Posts: 4
Joined: Thu Nov 19, 2020 3:51 pm

Re: Canadian/US tax implications for receiving Canadian pension

Post by jcorm » Sat Nov 21, 2020 11:15 am

Thanks so much!

Post Reply