Many former Canadian residents prefer spending their retirement years in the US, especially in the Southern states with better climate and more affordable property values. But this triggers many complexities, especially in reporting Canadian retirement income to the IRS. This article will give some quick tips on reporting of such income to the IRS.
First of all, it is important to determine what type of retirement income you are receiving. Should a person be a resident of Canada, the income would be reported on various T-slips which include but are not limited to:
- T4RSP slips – to report distributions from RRSP accounts which could be treated as annuity payments or regular account withdrawals;
- T4A slips – various pension, retirement, annuity or other similar income;
- T4A(P) slips – Canada Pension Plan benefits;
- T4A(OAS) slips – Canadian old age security payments.
If you, as a resident of the US and non-resident of Canada, have properly notified the payers of these benefits of your Canadian tax non-resident status, the income would be typically reported to you on forms NR4 instead of the above slips, and Canada would also withhold the non-resident tax based on the rates agreed between Canada and US (see comments about Canada-US Double tax treaty below).
As the above list shows, there is a great variety of types of social security and pension benefits that a former resident of Canada retired in the US may be receiving. You would refer to the type of the T-slip issued to you or to the code shown in the box 14 or 25 of form NR4 to determine the type of income paid.
It is important to understand the difference between these benefits to determine how they affect your US taxation and on which line of the US tax return they should be reported.
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