CORRECTION - US Social Security Disability benefits paid to Canadian resident Article XVIII(5)(a) -
The proper answer to this question is that US
Social Security disability payments are NOT taxed in Canada. When the
disability payment converts to a retirement pension, the pension then
becomes taxable in Canada.
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2 years ago I found that Social Security Disability paid by the US to
a US citizen who is a permanent resident of Canada was not considered 'income'
in Canada and was therefore tax free. I verified this with an agent from Revenue
Canada and I paid income taxes in Canada on only the pension earned from a
private insurer. I had even written down the official document number but after
a full day spent looking through every computer file I own, I can't find it.
Moreover, web searches are leading me to believe that Canada does in fact tax
Social Security v benefits.
Please answer my query. I don't want to get on the wrong side of Revenue Canada.
Thanks
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david ingram replies.
Social Security is always taxed by Canada when received by a Canadian resident under Article XVIII(5)(a) of the US / Canada Income Tax Convention (Treaty) as follows:
Please answer my query. I don't want to get on the wrong side of Revenue Canada.
Thanks
--------------------------------------------------------------
david ingram replies.
Social Security is always taxed by Canada when received by a Canadian resident under Article XVIII(5)(a) of the US / Canada Income Tax Convention (Treaty) as follows:
5. Benefits under the social security legislation in a Contracting State (including tier 1 railroad retirement benefits but not including unemployment benefits) paid to a resident of the other Contracting State shall be taxable only in that other State, subject to the following conditions:
(a) a benefit under the social security legislation in the United States paid to a resident of Canada shall be taxable in Canada as though it were a benefit under the Canada Pension Plan, except that 15 per cent of the amount of the benefit shall be exempt from Canadian tax; and
(b) a benefit under the social security legislation in Canada paid to a resident of the United States shall be taxable in the United States as though it were a benefit under the Social Security Act, except that a type of benefit that is not subject to Canadian tax when paid to residents of Canada shall be exempt from United States tax.
You put the gross amount on line 115 and claim 15% as a deduction on 256 under Art XVIII(5)(a) of the treaty. You then get a Pension Income deduction of up to $1,000 in the past and $2,000 for 2006 forward on line 314 of Schedule 1 and $1,000 and up on line 5836 of your Provincial 428 form. Ontario in 2006 was $1,158 and BC, NS and Manitoba were $1,000 in 2006 so it can change according to the province you live in.
Correct the prior years by filing Canadian form T1-ADJ and even though it will cost you, you should pay up. If the CRA catches you retroactively, the pemnalties and interest are not worth it.
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On November 10, 2007, David Ingram
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However, I regularly search for the words"PAYING CUSTOMER" and
always answer them first if they did not get spammed out. For the last two
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$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty advice on bankruptcy
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax help
Therefore, if an email is not answered in 24 to 36
hours, it is likely lost in space. You can
try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from
'me', you will have to phone to make an appointment. Gillian Bryan
generally accepts appointment requests for me between 10:30 AM and 4:00 PM
Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604)
980-0321. david ingram expert US
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income tax & immigration help to non-resident Americans &
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Phone consultations are $400 for
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This is not intended to be definitive but in
general I am quoting $900 to $2,900 for a dual country tax
return.
$900 would be one T4 slip one W2 slip one or
two interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,100 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 would be the minimum with a move in or
out of the country. These are complicated because of the back and forth foreign
tax credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,600 would be the minimum with a rental or
two in the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,700 would be for two people with income from two countries
$2,900 would be all of the above and you moved
in and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only
(lives in Canada, no US connection period) with two or three slips and no
capital gains, etc. for $200.00 up.
With a Rental for $400, two or three rentals
for $550 to $700 (i.e. $150 per rental) First year Rental - plus
$250.
A Business for $400 - Rental and business
likely $550 to $700
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and
$25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate
a couple)
Capital gains *sales) are likely $50.00
for the first and $20.00 each after that.
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
This from "ask an income trusts tax and immigration
expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram
deals on a daily basis with expatriate tax returns with multi
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