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US Citizen, Resident in Canada - Entering CPP and OAS under Social Security

Forum|Forum|2 years ago
March 21, 2024
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Since CPP and OAS are not taxed in the US if one is resident in Canada (they are only taxed in Canada), how can I update TurboTax Social Security Line 6a with the CPP+OAS amount and Line 6b with $0 since it is not taxable income?

I can not see a way of over-riding the Social Security Taxable amount field, 6b, and set it to zero.

Tax Advice

Best answer by ThomasM125

I think you want to report the social security income but have it show as not taxable in line 6(b) of Form 1040. You will need to report the social security income as if it was reported on a US Form SSA-1099, then enter a negative adjustment to income to cancel out the income appearing on line 6(b). You must list on the tax return the treaty that exempts the income from taxation.

You can make that adjusting entry in TurboTax as follows:

1. From the Federal menu in TurboTax find Wages and Income

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description of the treaty and the adjustment as a negative number

You must complete Form 8833 Treaty-Based return position disclosure and include it with your return. That form is not available in TurboTax, so you will need to complete that separately and attach it to your tax return that you would mail in. Here is a link to the form: Treaty income adjustment

T

ThomasM125Answer

I think you want to report the social security income but have it show as not taxable in line 6(b) of Form 1040. You will need to report the social security income as if it was reported on a US Form SSA-1099, then enter a negative adjustment to income to cancel out the income appearing on line 6(b). You must list on the tax return the treaty that exempts the income from taxation.

You can make that adjusting entry in TurboTax as follows:

1. From the Federal menu in TurboTax find Wages and Income

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description of the treaty and the adjustment as a negative number

You must complete Form 8833 Treaty-Based return position disclosure and include it with your return. That form is not available in TurboTax, so you will need to complete that separately and attach it to your tax return that you would mail in. Here is a link to the form: Treaty income adjustment

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M

MaryLou5Author

Thank you for the clear answer.

Two followup questions:

1 - Since you state that the form 8833 is required for every US citizen living in Canada who receive Canadian CPP or OAS, must ALL of the US tax forms(1040..etc...) be submitted on paper, rather then electronically with TurboTax?

2 - How does a layperson, like myself, find out what the specific Articles, Provisions, Sub-sections, etc. are required to use on the f8833 form, since almost every US (senior)citizen residing in Canada has to state the exact same information on the form for the Canada Pension Plan income to be exempt?

Thanks again..

AmyC

Employee

1. In Claiming Tax Treaty Benefits we see there are exceptions to filing the form. If all of your income falls into these categories, you do not have to file the form and can efile your return.

The payee does not have to file Form 8833 for any of the following situations:

The payee can claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate.
The payee can claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants.
The payee can claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.
The payee is a partner in a partnership, or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return.
The payments or items of income that are otherwise required to be disclosed total no more than $10,000.

2. Keep the link above handy so when it is updated, you will have the latest facts.

Bonus answer from Form 8833:

The payee must file a U.S. tax return and Form 8833 if claiming the following treaty benefits:

A reduction or modification in the taxation of gain or loss from the disposition of a U.S. real property interest based on a treaty.
A change to the source of an item of income or a deduction based on a treaty.
A credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code.

The payee must also file Form 8833 if the payee receives payments or income items totaling more than $100,000 and determines the country of residence under a treaty and not under the rules for determining alien tax status

Plus an FAQ for international individuals. and US Canada Treaty

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