PART II - Soc. Sec, CPP,

I have not tried to keep up with the Social Security CPP Windfall
Elimination Provision -  SOMEDAY I might,
In the meantime, a person who has been there and done that has the following
Everything you said in your response is correct. However, your questioner
may be in for a "surprise" when he/she is notified of their Social
Security benefit if they have less than 30 years of "substantial"
earnings in the U.S. They could have a reduced benefit equivalent
to as much as 50% of their CPP benefit! Fortunately the rule does
not apply to foreign based pensions such as OAS which are residency
based. One of your competitor advisors - Robert Keats, CFP, author
of the "Border Guide" which is a very good book in many other aspects
of cross border issues, disputes this provision because of a so called
"hidden statement" in the WEP (Windfall Elimination Provision)
rules, which I have never able to find after extensive research
nor was he able to provide the "verbatim" ruling after I e-mailed him.
His final comment was that I could dispute it legally but it would be
too expensive to make it worth while.
I would suggest you advise your questioner to access the Social Security
website which is a little complicated to navigate at first, but has
all the information they will need including an online Benefit Calculator
(WEP Version) which they can utilize to calculate their benefit to the
dollar after inputting the appropriate information. This is also a good
way to double check the award Social Security has calculated.
> ------------------------------------------
> Date:           Tuesday June 20, 2006
> Time:           10:35 AM -0700
> 1. Dual citizen, living in Canada. Drawing SS and paying Can. taxes on
> Is this correct? (Your note in the Dec. 1995 newsletter seems to indicate
> that the benefits of one are not taxable in the other, but some of the
> recent correspondence/advise in your group mailings reflect that 85% is
> taxable)
> 2. Starting this year drawing CPP, and next year OAS. How is this treated
> US return?
> 3. Are any of the benefit amounts effected by the drawing of another? e.g.
> Will my CPP drawing impact the amount of Social Security that I am
> -----------------------------------------------------
> david ingram replies:
> In the Dec 1995 newsletter we spoke of a change in the treaty that made
> OAS and FICA (US social Security) only taxable in the country that paid
> money.  i.e. only Canada would tax OAS and CPP and only the US would tax
> FICA no matter where you lived.
> Halfway through 1998, the powers that "be" decided they did not like the
> arrangement but it took until the summer of 1997 for them to change the
> rules so that they all became taxable in the country you lived in under
> Article XVIII of the US Canada Treaty.
> Therefore, you report your CPP and OAS AND FICA on the Canadian return and
> pay tax to Canada after remembering to deduct 15% of the FICA on line 256.
> They should all be reported on your US return as well on line 20a but put
> zero in 20b and attach a little or big note reminding the IRS that they
> all tax exempt under Article XVIII(5)
> Depending upon how long you lived in the US, there is sometimes a lowering
> of the FICA amount on the receipt of CPP.
> ------------------
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