CPP taxation Living in USA

[Sunset]

I moved to the USA nearly 2 decades ago, and became a Citizen

I am also a citizen of Canada, and now get the CPP (Canadian puny pension ).

I'm trying to figure out if I pay tax on it to Canada, I know I report it here in the USA (along with ALL my other WORLD WIDE income) and pay tax on it.

However, figuring out the Canadian part is hard, some places on internet say 25%, others say treaty means 15% , others say treaty means 0%.

I'm hoping there are some other transplanted Canadian's here, who currently have this down pat.

I know I can phone them, however, I have found sometimes they make huge errors, that take a long time to correct, and only because I know the answer ahead of time do I press for the correct answer.

 

[I was misinformed]

I moved to the USA nearly 2 decades ago, and became a Citizen

I am also a citizen of Canada, and now get the CPP (Canadian puny pension ).

I'm trying to figure out if I pay tax on it to Canada, I know I report it here in the USA (along with ALL my other WORLD WIDE income) and pay tax on it.

However, figuring out the Canadian part is hard, some places on internet say 25%, others say treaty means 15% , others say treaty means 0%.

I'm hoping there are some other transplanted Canadian's here, who currently have this down pat.

I know I can phone them, however, I have found sometimes they make huge errors, that take a long time to correct, and only because I know the answer ahead of time do I press for the correct answer.

I believe you will not have to pay any Canadian tax. My personal experience is that the CPP payments are made to one's bank account without any withholding and there is no need as a US resident & citizen to file a Canadian tax return.
This is confirmed by the source I quote below.

I believe the 25% withholding for non-Canadian residents comes into play when one withdraws your money from the Canadian equivalent of a 401K plan.

Anyways with respect to CPP, the web site

https://www.greenbacktaxservices.com/blog/canadian-retirement-plans-us-taxation/

says:

"According to the IRS, special tax treatment applies to payments received from the Canadian pension, the Quebec pension plan, and the Old Age Security plan. If the recipient is a resident of the United States, the benefits are taxable only in the United States, treated as US social security benefits for US tax purposes. It’s not treated as a Canadian social security benefit, it’s treated as a US social security benefit, and would be taxed the same way US social security benefits are taxed. Then it’s reported on form 1040 or a 1040A depending on which one you’re filing, on the line in which US social security benefits would be reported."

 

[gauss]

Is the CPP being reported to you by the Canadian officials on form NR4 reflecting your non-residency status?

The following link, from original Canadian sources, may shed some insight on the 25% / 15% / 0% scenarios

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-international/before-apply.html

 

[Sunset]

I believe you will not have to pay any Canadian tax. My personal experience is that the CPP payments are made to one's bank account without any withholding and there is no need as a US resident & citizen to file a Canadian tax return.
This is confirmed by the source I quote below.

I believe the 25% withholding for non-Canadian residents comes into play when one withdraws your money from the Canadian equivalent of a 401K plan.

Anyways with respect to CPP, the web site

https://www.greenbacktaxservices.com/blog/canadian-retirement-plans-us-taxation/

says:

"According to the IRS, special tax treatment applies to payments received from the Canadian pension, the Quebec pension plan, and the Old Age Security plan. If the recipient is a resident of the United States, the benefits are taxable only in the United States, treated as US social security benefits for US tax purposes. It’s not treated as a Canadian social security benefit, it’s treated as a US social security benefit, and would be taxed the same way US social security benefits are taxed. Then it’s reported on form 1040 or a 1040A depending on which one you’re filing, on the line in which US social security benefits would be reported."

Excellent ..

Now, before I read this, I did phone CCRA (Canada Tax folks), got transferred to Non-resident group, then told by a person the WRONG information, they said 25% tax. I questioned it, as zero tax was withheld on the NR4 form, and asked doesn't the USA - Canada treaty say something different.

At that point the person, said they would have to transfer me to higher up person with knowledge of the treaty .

The treaty person, told me, due to Section 18, Paragraph 5, Subsection B, I was to be taxed only in the USA as if it were SS.
This is why my tax slip from CPP shows Zero tax withheld, as CPP knows I'm a non-resident.

Here is the treaty:
https://www.fin.gc.ca/treaties-conventions/unitedstates-etatunis-eng.asp

NOTE: the reverse applies in my quick reading for Americans (SS recipients) living in Canada, only 15% of it is not taxable, to make it like SS in the USA.

Thanks to all that replied, as this is an important, but boring topic, that only affect a small % of the forum users.

 

[Sunset]

Is the CPP being reported to you by the Canadian officials on form NR4 reflecting your non-residency status?

The following link, from original Canadian sources, may shed some insight on the 25% / 15% / 0% scenarios

https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-international/before-apply.html

This link is shows a nice simple summary, explains why CPP didn't withhold taxes on me, shows lots of countries as well.
Shows I won't owe taxes on the CPP death benefit too which is $2,500 , but I'm hoping NOT to collect it too soon

 

[canuck5]

Susnset, thanks for asking the question and all the responses .... I'm in the same boat, but 3 years away from starting to collect.

 

[Sunset]

Susnset, thanks for asking the question and all the responses .... I'm in the same boat, but 3 years away from starting to collect.

When you file, be sure to let CPP know you are living in the States, and check the box to say no taxes withheld when you apply if you have that option.

Otherwise you will have to file CDN tax returns to get the money back, and there are time limits, and then a wait of months for the refund.
I know as I do a CDN tax return for a rental.

You might want to open a CDN bank account (before you apply for CPP for direct deposit in Canada) if you don't have one, at that time, so you can convert the $$ to USD in blocks and have better conversion options and rates available.

 

[canuck5]

Thanks Sunset! Yeah, I already have the Canadian bank account set up! CPP already has my address down here, too, so I'm getting in shape.