Date: Sunday February 27, 2005
Time: 10:47 AM -0800
QUESTION:
How does Revenue Canada treat US Social Security paid to a US citizen living
in Canada as a PR? Also, what about NYS teacher's pension which is not
taxable in NYS but is taxable at federal level in US?
-------------------------------
david ingram replies:
Under Article XVIII of the tax treaty your US social Security is NOT taxable
in the USA - period -
100 % of the pension (converted to Cdn $$$) goes on line 115 of the Canadian
return and 15% gets taken off at line 256 so that a maximum of 85% of the
pension is taxed in Canada.
In addition, you are entitled to claim a $1,000 pension exemption amount at
line 314 of the federal Schedule 1 and the corresponding line on your
provincial calculation schedule (which line is numbered differently for
each province and is 5836 on the MB 428 as an example).
Your New York Teacher's pension also goes on line 115. It is also still
taxable on your US federal 1040 but is limited to 15% which is a foreign tax
credit on line 431 of the Canadian Federal Schedule 1 and also on the
equivalent line (if not all used on the Federal) of the provincial schedule
(usually BC 428 or MB 428, etc) such as line 68 of the Manitoba MB 428 as
an example. You also have to fill out form T2036 for the provincial foreign
tax credit.
If you cannot get it figured out, send it to us at the address below. You
will go crazy trying to find someone to do it for you. If you see what we
do this year, you might be able to follow it for next year.
Canada will NOT allow any more foreign tax credit than 15% on pension or
dividend or royalty income and 10% on interest income. If your actual tax
figures to the US are more than those amounts, you have to claim the excess
back from the US with a rather complicated calculation. If you are only
talking $100.00 forget about it. If it runs into the thousands as it will
with a $60,000 US pension, you will need pour services. In the last 15
years, I have NEVER seen it done correctly by another consultant although I
was told that a fellow with the first name of Steve (with KPMG) does it
correctly in Halifax.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram host a LIVE talk show called "ITS YOUR
MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Local calls are taken at (604) 280-0600 and Long Distance calls are taken at
1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They are
held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900
for more information.
=========================================
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 Fax (604) 980-0325
Email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com> www.david-ingram.com
<http://www.david-ingram.com/>
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income tax, real estate RRSP IRA RESP 401K & immigration experts david
ingram & mutual funds expert Fred Snyder on CKBD 600AM Sundays at 9:00 AM
www.600am.com international preparers consultants preparer consultant
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