PFRDA

Do you pay income tax on both sides of the border?

I am and American citizen & a landed immigrant in Canada., for over 20 yrs. I have just started to collect. the Cdn . Canada Pension, Old age Security & Social Security Income from the U>S>A> .I plan on still working. Do I have to claim all of this income to both countries. or just the SSI to the American income tax and just earned wages & pensions to Canada. How much can I earn before a clawback from both countries?

Public Comments

1. If you get it in Canada, you claim it in Canada.
2. As a US citizen, you are legally obligated to report and pay US federal taxes on your total worldwide income, regardless of its origin or source. Due to a double-taxation-relief treaty between the US & Canada, you are allowed to exclude $70,000 of EARNED INCOME from canada from your US tax return. You cannot exclude passive income from bank interest, dividends, cap gains - even if they are earned in Canada. In addition, you can deduct part or all of the Canadian tax you pay ( federal only, I believe ) as a credit on your US return, so in essence you end up paying the tax equivalent to the country that charges you more. In this case, your Canadian Federal Tax is likely higher, so that's you final effect. There are many tax companies in Canada who would be happy to help you with this issue. Do go and see them, they are well versed in the law and tax treaty, and the fees you pay them will be well worth it so you sleep well at night.
3. Only if caught.