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taxmap/pubs/p597-002.htm#TXMP6c9edf13 Pensions, Annuities,   Social Security, and   Alimony

Pensions, Annuities, Social Security, and Alimony

Under Article XVIII, pensions and annuities from Canadian sources paid to U.S. residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Canadian pensions and annuities paid to U.S. residents may be taxed by the United States, but the amount of any pension included in income for U.S. tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident.

taxmap/pubs/p597-002.htm#TXMP20939847 Pensions.

A pension includes any payment under a pension or other retirement arrangement, and payments under a sickness, accident, or disability plan. It includes pensions paid by private employers and the government for services rendered. Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada.

Pensions do not include social security benefits.

taxmap/pubs/p597-002.htm#TXMP118a970c Tax-deferred plans.

Generally, income that accrues in a Canadian RRSP or RRIF is subject to U.S. tax, even if it is not distributed. However, a U.S. citizen or resident can elect to defer U.S. tax on income from the plan until the income is distributed. Form 8891 is used to make the election.

taxmap/pubs/p597-002.htm#TXMP52fc8629 Annuities.

An annuity is a stated sum payable periodically at stated times, during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered).

taxmap/pubs/p597-002.htm#TXMP08c02338 Social security benefits.

Benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident are taxable only in the United States.

These Canadian benefits are treated as U.S. social security benefits for U.S. tax purposes. If your total income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax. See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for more information on the tax on U.S. social security benefits. Any benefit under the social security legislation of Canada that would not be subject to Canadian tax if paid to a resident of Canada is not subject to U.S. tax.

taxmap/pubs/p597-002.htm#TXMP20db7574 Alimony.

Alimony and similar amounts (including child support payments) from Canadian sources paid to U.S. residents are exempt from Canadian tax. For purposes of U.S. tax, these amounts are excluded from income to the same extent they would be excluded from income in Canada if the recipient was a Canadian resident.

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