Canadian Pension Plan US/CA Agreement

Table Of Contents


Article: 50099

Overview

Beginning in 1984, the United States and Canada entered into a bilateral agreement designed to streamline Social Security coverage and benefits for individuals who live and work across both countries. This agreement helps ensure that workers are not subject to dual taxation and can qualify for benefits more easily.

Purpose of the Agreement

The primary objectives of the U.S.-Canada Social Security Agreement are:

  • Avoiding Dual Coverage: Citizens who are employed in one country but reside in the other are required to pay Social Security taxes to only one country, rather than both.
  • Combining Credits: At the time of retirement, individuals can combine work credits earned in both the United States and Canada. This helps workers meet minimum eligibility requirements for Social Security benefits in either country.

Tax Reporting and Treatment

Due to the agreement:

  • Canada Pension Plan (CPP) Income is treated similarly to United States Social Security income for U.S. tax purposes.
  • CPP benefits must be reported to the IRS using the same methodology as U.S. Social Security income, simplifying the tax reporting process for affected individuals.

Implications for Taxpayers

U.S. residents receiving CPP income should ensure it is reported appropriately on their federal .

Eligibility for Social Security benefits may be evaluated based on combined credits from both countries.

How to Report Your Canadian Pension Plan Income

You will need to enter this on the Social Security Benefits screen. To add the form with the amounts to the return, follow the steps below:

  1. Go to the Federal taxes section.
  2. Click on the Review tab on the left-hand side.
  3. Select I’d like to see the forms I’ve filled out or search for a form.
  4. Under the General tab, click the Social Security Benefits screen
  5. Click +Add
  6. Click Next.
  7. Select Yes to the first question and then enter the amount of the pension.
  8. Click Next and select No.
  9. Click Save to apply changes.

Additional Resources

For more information about the agreement and reporting requirements, refer to:

Tags
state tax form tax credit tax deduction dependent health insurance refund irs form schedule k1 estimated tax tax return