Canadian living in Canada, receiving US SS and US retirement

[ziggy1465]

Does a Canadian, living in Canada,  receiving US SS and a US retirement need to file US taxes in addition to Canadian taxes?

come as well?

[marctu]

So at this point you are a non-resident alien for US tax purposes. (Taxation of nonresident aliens).  The US has a Totalization agreement with Canada for the Social Security as well as a Bilateral Income Tax Treaty for the other retirement income.  

Article XVIII of the US Canada Tax Treaty, Paragraph 5 speaks to the social security:

Benefits under the social security legislation in a Contracting State paid to a resident of the other
Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

Paragraphs 1 and 2 speak to pensions and annuities (retirement income):

1. Pensions and annuities arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State, but the amount of any pension included in income for
the purposes of taxation in that other State shall not exceed the amount that would be included in the
first-mentioned State if the recipient were a resident thereof.

2. However:

(a) Pensions may also be taxed in the Contracting State in which they arise and
according to the laws of that State; but if a resident of the other Contracting State is the
beneficial owner of a periodic pension payment, the tax so charged shall not exceed 15 per cent
of the gross amount of such payment; and

(b) Annuities may also be taxed in the Contracting State in which they arise and according to the laws of that State; but if a resident of the other Contracting State is the beneficial owner of an annuity payment, the tax so charged shall not exceed 15 per cent of the portion of such payment that is liable to tax in the first-mentioned State.

Thank you for the question @ziggy1465 

All the best,

Marc T.

TurboTax Live Tax Expert

27 Years of Experience Helping Clients

[ziggy1465]

Hi Marc,

So am I correct that Social Security is only taxed in Canada and the CalPers retirement income needs to be included in both Canadian and US income taxes?  If so, who do we file with first on the CalPers retirement, the US or Canada?  I ask because I understand re allowed a tax credit from one county to the other.

In another question I asked, I was told to file in Canada first and then the US.  But CRA asks about any tax paid to the US which I wouldn't now unless I've already filed in the US.  

So should I first file in the US on the CalPers income and then in Canada on my worldwide income, taking a tax credit for any US taxes paid?  Or do I do the reverse, starting with filing in Canada ...

[marctu · Accepted solution]

Yes to the Social Security.  You would receive a credit on your Canadian taxes for the taxes paid on the Calpers retirement.  Since the credit flows from the US to Canada, I would file in the US first and then Canada.

Thank you for the follow up question @ziggy1465 

All the best,

Marc T.

TurboTax Live Tax Expert

27 Years of Experience Helping Clients