QUESTION:
Situation - Cdn citizen and resident
receiving survivor pension income from 2 US sources; US Social Security
(15K) and a US company pension (9K). Must a US tax return be filed?
I understand that US Soc Sec is taxed in Canada only under treaty but what
about US company pension money?
-________________________________-
david ingram replies:
your US company pension should have 15% tax withheld at source in the USA.
With the 15% withholding, your obligation to the IRS is over. If it was not
withheld in 2004, you should file a 1040NR and report and pay the 15% under
the treaty provision on page 4 of the 5 page return. Then you notify the
payer to deduct 15% for the future and you will not have to file a return
for 2005.
You will then convert the company pension to Canadian Dollars and report
100% of it on line 115 of your return.
The social Security is NOT taxable in the US when paid to a Canadian
resident (even if you are a US citizen).
Convert the Social Security to Canadian dollars and put the amount with the
company pension (and any Canadian company pensions) on line 115.
THEN on line 256, deduct 15% of the Social Security reported on line 115.
Don't worry why, just do it. And if you want reassurance, you can find the
instructions on page 30 in the T1 General Guide for line 256. You can get a
copy of the guide at any Canadian Post office or print it off the internet
at:
http://www.cra-arc.gc.ca/formspubs/t1general/menu-e.html
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