Do you receive Social Sec. from another country?

[itsmyparty]

Prior to emigrating to the US from Canada many years ago (I now have dual citizenship), I worked for about 12 years in Canada...and qualify for 'social insurance' ... not alot of $, but I'd like to take it! I don't yet qualify for US social security yet, but Canada's earliest eligibility age is 60. I do know about the reciprocity agreement that allows a person to apply the years worked in another country (where they do give reciprocity) to our social security here...but it doesn't increase the amount - its only useful to apply 'years' if do not have enough quarters in earnings to qualify for SS - then you can use those years worked outside the country. I don't need that feature - so would like to just apply for the cash. I am wondering though if this causes many problems tax-wise - either in Canada or US. Since we visit Canada at least once a year, I wondered if there would be a problem if I opened a bank account there and had the checks direct deposited for use when we visit. Anyway, just wondered if anyone out there has any experience with this (I know there must be lots of expats from many countries)...and wondered if they had any info or advice to give. Thanks.

 

[Ed_The_Gypsy]

I dunno, but I would be interested, too.

I went north and have been paying into CPP for several years now. If I get Permanent
Residency, I am told I can get paid, but not before.

 

[Alan]

I paid into the SS system in England 19 years and am entitled to draw it when I am of age (67? I think).

I am also already drawing a private pension from one of my former UK employers. It is paid in pounds into my bank account in England. At first the UK IRS told the company what withholdings to make and wrote to me with forms asking me to declare all other income. A little bit of research and I found I had to file a form with the US IRS to get certificate stating that I was filing taxes with them and to the best of their knowledge would continue to do so. (cost me $35 to get this certificate). I then filed a UK IRS form that included the US IRS statement stating that I am being taxed in the USA. It worked and the IRS wrote to my UK company and they rfeunded what I had paid so far and now no longer withhold taxes.

When I file taxes in the USA I declare the pension and pay US taxes on it. The cost basis is zero since I funded my UK pension with before tax money. I keep a spreadsheet and use historical exchange rate data from XE.com for every pension payment so I know how many $ to report as income. (same goes for the interest payments from my UK bank savings account)

 

[itsmyparty]

Thanks for the responses. Alan, thanks for the detailed information on your situation vis a vis the UK. After reading it, I suspect it will be similar with Canada. Now at least I'll have an 'understanding' of how it works when I do call to start the process. I'll have to set up a bank account too for deposit. Collecting all these checks - big or little - is about the only thing good about getting 'older'!! Thanks again.

 

[FIREd]

I would personally open a checking account in Canada, have the SS payment direct deposited into that account and request a debit card to access the money from the US in case you ever need it, or otherwise use the money when you travel to Canada. At any rate, you will be required to report that income on your US tax return in USD (using the proper exchange rate, which is the exchange rate on the last day of the year you are filing for), and if you paid any taxes in Canada on the money received, you could claim a foreign tax credit.

 

[itsmyparty]

Thanks very much Firedreamer for your reply and the great information, especially the tax info. I think I have enough info now to start the process when the time comes....which is pretty soon. Love that idea about using a debit card to access the account ... hadn't thought of that. Thanks again.

 

[Alan]

I would personally open a checking account in Canada, have the SS payment direct deposited into that account and request a debit card to access the money from the US in case you ever need it, or otherwise use the money when you travel to Canada. At any rate, you will be required to report that income on your US tax return in USD (using the proper exchange rate, which is the exchange rate on the last day of the year you are filing for), and if you paid any taxes in Canada on the money received, you could claim a foreign tax credit.

This is exactly what I do regarding debit cards and banking accounts. However I calculate income based on the exchange rates on the dates I received payments.

From the irs.gov website:

Make all income tax determinations in your functional currency. If your functional currency is the U.S. dollar, you must immediately translate into dollars all items of income, expense, etc. (including taxes), that you receive, pay, or accrue in a foreign currency and that will affect computation of your income tax. Use the exchange rate prevailing when you receive, pay, or accrue the item. If there is more than one exchange rate, use the one that most properly reflects your income. You can generally get exchange rates from banks and U.S. Embassies.

 

[FIREd]

However I calculate income based on the exchange rates on the dates I received payments.

My bad. I got mixed up with the exchange rate rules. I just filed form TDF90-22 with the department of treasury (report of foreign accounts) and for that form the rule is to use the exchange rate prevalent on the last day of the year to calculate your account balances. Also, my only foreign income right now is interest income and I happen to receive it on 12/31 each year, so I always use the exchange rate prevalent on that particular date.