U.S. & Canadian dual tax filers often wonder if the Canada Pension Plan (CPP) and Old Age Security (OAS) payments, which provide retirement benefits to Canadians in their later years, is taxable in the U.S. and Canada. The answer depends on where you live!
CPP and OAS payments to individuals who live in the U.S.: What you need to know
If you’re a resident of the USA, then your benefits are only taxable in America. This means that CPP/OAS is treated as if it were U.S. social security and reported accordingly on Form 1040 for taxation purposes with an 85% inclusion.
Further, because there is an agreement between Canada and the U.S. this income would not appear on your Canadian return and there would be no nonresident withholding.
CPP and OAS payments to individuals who live in Canada: What you need to know
However, if you’re a U.S. citizen or green card holder living in Canada, your benefits are taxed only in Canada.
We also recommend reporting these earnings on your U.S. Form 1040 and claiming a treaty exemption by filing Form 8833 to reduce your chance of any potential penalties for not reporting this income.
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The views expressed in this article are those of the author and should not be relied on to make decisions. Consider discussing your specific circumstances with an appropriate specialist.