Question

Entering Canada Pension Plan (CPP) -- Taxable Part of Distribution

Forum|Forum|1 year ago
March 26, 2025
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I have a follow-up question to the reply to "Where to Report Canada Pension Plan...".

When I get to distributions, the form first asks Total Distribution. I assume this is the payout (NR4 Box 16 - Gross Income).

The form then asks Taxable Part of Distribution. If there was no tax withheld by the Canada Revenue Agency, then the value would be the same as Gross Income, correct? (If taxes were withheld -- NR4 Box 17 is not blank -- then the difference would be the Taxable Part of Distribution?)

In my case NR4 Box 17 is indeed blank, so I suspect the response is the same as Gross Income. There would not be any special taxation treatment for this Income as is for U.S. Social Security (i.e. 85% taxable over a certain value).

Roy...

Ask the Experts - Education - Mar 2025

D

DianeW777

Yes, your taxable amount would be the same as the gross income. The information below is from the link provided and based on your plan (CPP) you would be allowed the same treatment for US social security payments..

Under income tax treaties with Canada and Germany, Social Security benefits paid by those countries to US residents are treated for US income tax purposes as if they were paid under the Social Security legislation of the United States. In other words, if you're a US resident, you'd enter your Canadian CPP and OAS benefits as though you'd received a Form SSA-1099 from the Social Security Administration.

The U.S.-Canada tax treaty also applies to the Québec Pension Plan (RRQ). Note that the agreement only addresses government-issued Social Security benefits, not money received from private Canadian pensions.

How do I enter my Canada Pension Plan (CPP) or Old Age Security (OAS) benefits?

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R

Roy VanderlindenAuthor

Interesting. If I avoid entering my CPP income as if it were a Canadian Registered Pension Income, and treat it as if it were Social Security Income, I do get better tax treatment.

However, I fear a future problem would occur when I activate my U.S. Social Security. I do not see an opportunity to declare a second revenue stream. There is only one Box 5 field for net benefits. This would mean that I would have to sum up two quantities from two different sources (CPP and SS).

So, would adding both sources be acceptable to the IRS?

Roy...