For an American citizen residing in Canada using Form 1040A, is
the taxable amount of U.S. social security benefits $0.00 due to the Canada-U.S.
tax treaty?
Under the 1997 protocol to the Canada - U.S. tax treaty, the Canadian and
U.S. governments agreed to return to a residence-based system under which
social security benefits are taxable exclusively in the country where the
recipient resides. As a result, the entry for taxable social security is $0.00.
References:
- Tax Topic 423, Social Security and Equivalent Railroad Retirement
Benefits
- Publication 597, Information on the United States-Canada Income
Tax Treaty
- Publication 915, Social Security and Equivalent Railroad Retirement
Benefits
In addition to U.S. Social Security, I also receive British Social
Security. How should I report the British Social Security income?
Under the current U.S.-United Kingdom income tax treaty which became effective
2003, social security income is taxable only by the country of residence.
If you are a resident of the U.S. for tax purposes, the income would be reported
and taxed in the U.S. You would not treat the income as U.S. social security
benefits. The entire amount would be taxable as pension and annuity income
on your U.S. tax return. Your "investment in the contract" for purposes of
determining the portion of each payment that is taxable would be $0. Under
the prior treaty with the UK, social security benefits were treated the same
way.
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