US Social Security taxable? FICA (Federal Insurance Contributions Act) France, Germany, Algeria
QUESTION:
David I found this technical sheet at CCRA which seems to point to Social security contributions as taxable.
http://www.cra-arc.gc.ca/E/pub/tp/itnews-31r/itnews-31r-e.html#P21_777
Would this indicate that People living in Canada and working in the US would have to now add their FICA deductions as income?.
david ingram replies:
No it does not. It specifically STATES THAT THEY ARE STILL DEDUCTIBLE
You have to look at the little paragraph which is included in the Technical News Bulletin 31R.
After clearly stating that they are not a foreign tax credit "because", they then put in an "HOWEVER" clause.
I quote:
"As provided in the Canada-U.S tax convention however, Canada has specifically agreed to give a foreign tax credit for payments under the Federal Insurance Contributions Act, more commonly known as FICA taxes. In accordance with our tax treaty with the U.S., the CRA will continue to allow a foreign tax credit for FICA taxes."
What this year old bulletin says is that French and German Social Security payments will no longer be a credit. US FICA which is commonly referred to as Social Security is still a credit.
What it really says is that social security paid to any country will not be a credit unless it has been dealt with in a treaty as with the US. One of my clients working in Algeria is paying big time because of this.
David I found this technical sheet at CCRA which seems to point to Social security contributions as taxable.
http://www.cra-arc.gc.ca/E/pub/tp/itnews-31r/itnews-31r-e.html#P21_777
Would this indicate that People living in Canada and working in the US would have to now add their FICA deductions as income?.
david ingram replies:
No it does not. It specifically STATES THAT THEY ARE STILL DEDUCTIBLE
You have to look at the little paragraph which is included in the Technical News Bulletin 31R.
After clearly stating that they are not a foreign tax credit "because", they then put in an "HOWEVER" clause.
I quote:
"As provided in the Canada-U.S tax convention however, Canada has specifically agreed to give a foreign tax credit for payments under the Federal Insurance Contributions Act, more commonly known as FICA taxes. In accordance with our tax treaty with the U.S., the CRA will continue to allow a foreign tax credit for FICA taxes."
What this year old bulletin says is that French and German Social Security payments will no longer be a credit. US FICA which is commonly referred to as Social Security is still a credit.
What it really says is that social security paid to any country will not be a credit unless it has been dealt with in a treaty as with the US. One of my clients working in Algeria is paying big time because of this.
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