BulldogTom Posted February 4, 2009 Report Share Posted February 4, 2009 Help from those of you familiar with Canandian pensions. Taxpayers are H&W. She lives in US and recieves SS. He lives and works in Costa Rica. He recieves US SS and Canadian Pension from the Government of Canada. His Canandian Pension shows an amount withheld for Non-Resident Tax Withholding. What the heck do I do with this? Specifically, do I report it like a pension and enter it like a 1099R, or do I add it to the amounts from the 1099 SSA? Do I use a Form 1116 and take credit for the withholding? Your expertise is greatly appreciated. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Maura Posted February 4, 2009 Report Share Posted February 4, 2009 Can you be more specific about the kind of pension? Is it an RSP, RIF Canadian old age, or Quebec Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 4, 2009 Author Report Share Posted February 4, 2009 Can you be more specific about the kind of pension? Is it an RSP, RIF Canadian old age, or Quebec I am not sure. In the box for income code, one of the forms has code "46" and the other has code "44". It is issued by Service Canada / Canada Pension Plan. The other issue is the amounts are in Canadian Dollars. How do I convert to US$ (I realize I can look up the conversion rate on a bank web site, but I am sure the US tax code has a requirement to use a certain date or something). Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Maura Posted February 4, 2009 Report Share Posted February 4, 2009 You can use this site for the currency conversions. If you know the exact date plug it in. You can also get an average rate for the year if there were multiple payments. What nationality is the guy in Costa Rica? It might affect the answer. Quote Link to comment Share on other sites More sharing options...
Maura Posted February 4, 2009 Report Share Posted February 4, 2009 oops! forgot the link http://www.oanda.com/channels/products/products.shtml Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 4, 2009 Author Report Share Posted February 4, 2009 He is now a US citizen. I don't know when that happened. At some point in his life he was something else, and now he is one of us. Tom Lodi, Ca Quote Link to comment Share on other sites More sharing options...
Maura Posted February 4, 2009 Report Share Posted February 4, 2009 Canada does not have a treaty with Costa Rica. So they will withhold a 25% tax on the CPP payment. If he thinks he is entitled to a lower tax rate then he will need to file in Canada an NR7-R 9 (I believe). From the Canadian perspective I am not sure if he is entitled to the reduction since he is resident to Costa Rica. If he were resident to the US then the CPP would not be taxable to Canada and would be treated the same as social security payments. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 4, 2009 Author Report Share Posted February 4, 2009 That takes care of Canada, but what about his 1040? Where do I enter the pension? Does he get a foreign tax credit? Sorry to be asking such basic questions. Never had to deal with this before. Thanks Maura. Tom Lodi, cA Quote Link to comment Share on other sites More sharing options...
Maura Posted February 4, 2009 Report Share Posted February 4, 2009 The CPP payments are reported on line 20a and taxable amount on line 20b. The same as US social security. You would use the social security worksheet to figure the taxable amount. As for the tax credit I am not sure. Are they paying tax on the social security? Quote Link to comment Share on other sites More sharing options...
jainen Posted February 5, 2009 Report Share Posted February 5, 2009 >>Never had to deal with this before.<< I tried moving further away from the Canadian border, but it turns out that's not the only border. I'm pretty sure he gets the foreign tax credit, but you have to fill out all the lines of Form 1116 (instead of the shortcut method like for 1099-DIV). And it always seems necessary to re-read the convoluted instructions because many of the most important words have a different meaning than in the rest of the tax code. I either remember or imagine that a long time ago I read that Canadian pensions, including Social Security, are treated very much the same as our American counterparts on the tax return. It may have been in the tax treaty. That is one reference I read with little understanding a long time ago and never looked at again. Quote Link to comment Share on other sites More sharing options...
zeke Posted February 5, 2009 Report Share Posted February 5, 2009 Don't you just love it Tom?? Even Jainen's rare claim of being uninformed is erudite!! My response would be just z Quote Link to comment Share on other sites More sharing options...
MargaretMort Posted February 6, 2009 Report Share Posted February 6, 2009 I hesitated to jump in on this one because I can't quote chapter and verse but.....Canadian retirement is treated like social security, as I recall. I looked back in my records but can't find the phone number for Canada taxes. They were very helpful and knowledgeable. I will get in touch with my Canadian friends and ask if they know the phone number. MM Quote Link to comment Share on other sites More sharing options...
MargaretMort Posted February 6, 2009 Report Share Posted February 6, 2009 Okay, my source says the phone number for Canadian/ foreign income tax is 1-800-267-5177. As they are posted in the US at the moment I would guess the person at the other end of the line came give you all the info you need on the Canadian income. Hope this helps. MM Quote Link to comment Share on other sites More sharing options...
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