How do you make TurboTax understand that Social Security and Canada Pension Plan benefits paid to Canadian residents aren't taxed by the U.S.?

Forum|Forum|4 years ago
January 5, 2022
2 replies
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The "best" answer so far is to take a tax credit, which is cumbersome and misses the point. The U.S. does not tax these benefits, period, regardless of how much foreign tax is paid. A Canadian residence should be sufficient for TurboTax to consider the payments non-taxable on a U.S. return. Is there any place in TurboTax to specify the non-taxable portion (in this case 100%), as is done for RRSPs?

TurboTax Premier Online

Best answer by rjs

The Help for the Social Security Benefits Worksheet in the CD/Download TurboTax software says if you are a U.S. citizen residing in Canada, do not enter the amount from box 5 of your SSA-1099. It doesn't say anything about needing Form 8833. Apparently they think it's okay to just omit the income, and not show it on line 6a.

I don't think that omitting it would cause any trouble. The IRS knows it's not taxable. They don't go after people when they can see that they are not going to be able to collect any additional tax.

Vanessa A

Are you a US Citizen? Why are you filing a US return?

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WT6Author

Yes, I'm a U.S. citizen living in Canada. According to IRS Pub 915 pg. 6, any Social Security benefits should be reported on line 6a of Form 1040, and the taxable amount should be reported on line 6b. It also says that taxpayers residing in Canada do not pay U.S. tax on Social Security benefits. TurboTax doesn't have an interview question about this, and it calculates the taxable amount as it would for a U.S. resident. The only option I can see is to override the calculated amout on line 6b, but that obviously takes away the ability to e-file.

Vanessa A

You are correct, the only way to report your SSA benefits on line 6a and have $0 reported for line 6b would be to override line 6b and then print and mail your return.

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Anna803

You don't. This is something covered under the US-Canada Tax Treaty and TurboTax does not support Tax Treaty claims or the required Tax Treaty Form 8833. The instructions in Pub 915 are the general instructions but they don't address all of the nuances including when you may need to file Form 8833.

If you want to use TurboTax online your best bet is don't report it and then if you get a notice from the IRS asking why, reply explaining that you are a Canadian resident and return Form 8833 with your reply.

If you want to file using TurboTax Desktop, override the taxable portion of social security, complete Form 8833 on your own, and print your return and mail it with the form attached.

WT6Author

@Anna803I went down that path, but if you read the instructions for Form 8833, it explicitly says that reporting with a Form 8833 is waived for treaty positions involving annuities, pensions and Social Security. So filing that form would only confuse the matter. It seems like the real solution is for TurboTax to allow the filer to enter a taxable amount, with a warning that the situations that require this are rare, and a reference to Pub 915.

rjsAnswer

Employee

I don't think that omitting it would cause any trouble. The IRS knows it's not taxable. They don't go after people when they can see that they are not going to be able to collect any additional tax.