Canadian & U.S. Tax Issues
Question: Are the Canada Pension Plan and Canadian Old Age Security benefits taxable? If they are, please tell me where they should be entered on Form 1040.
Answer:
The taxation of payments received from Canadian retirement programs that are similar to the U.S. Social Security system receive special tax treatment due to an income tax treaty between the United States and Canadian governments. The way this income is taxed depends on the recipient’s residence.
The special tax treatment applies to payments receive from the following Canadian retirement programs: Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS)
- If the recipient is a resident of the United States, the benefits —
- are taxable only in the United States,
- are treated as U.S. social security benefits for U.S. tax purposes, and
- are reported on Form 1040 (PDF), U.S. Individual Income Tax Return or Form 1040A (PDF) on the line on which U.S. social security benefits would be reported.
- If the recipient is a U.S. citizen or lawful permanent resident (green card holder) who is a resident of Canada, the benefits —
- are taxable only in Canada.
NOTE: Refer to Tax Topic 423 for information about determining the taxable amount of your benefits.
Additional Information:
- Publication 519, U.S. Tax Guide for Aliens
- Publication 597, Information on the United States-Canada Income Tax Treaty
- Publication 915, Social Security and Equivalent Railroad Retirement Benefits
Category: U.S. Aliens and Citizens Living Abroad
Subcategory: Canadian & U.S. Tax Issues
