United States citizens living abroad are required to file annual U.S. income tax returns and report their worldwide income if they meet the minimum income filing requirements for their filing status and age. You must contact the Canadian Government to determine whether you must file a Canadian tax return and pay Canadian taxes. For the United States income tax return, you will have options available to you to claim a foreign tax credit or exclude some or all of your foreign earned income.

References:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 514, Foreign Tax Credit for Individuals
• Publication 597, Information on the United States-Canada Income Tax Treaty

You must comply with both U.S. and Canadian filing requirements. In the United States, you generally are required to file a return if you have income from the performance of personal services within the United States. However, under certain circumstances, that income may be exempt from payment of U.S. tax pursuant to the U.S.-Canada income tax treaty. You need to determine what type of visa you have, and how that impacts your residency status in the United States. If, based on the tax code and your visa status you are treated as a U.S. resident, then your entitlement to treaty benefits will be impacted. You must contact the Canadian government to determine whether you must file a Canadian tax return and pay Canadian taxes.

References:

• Publication 519, U.S. Tax Guide for Aliens
• Publication 597, Information on the United States-Canada Income Tax Treaty
• Publication 901, U.S. Tax Treaties

Benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident if taxable, are taxable only in the United States. According to the U.S. - Canada income tax treaty, taxation of these benefits is based exclusively on residence. U.S. citizens or green card holders who reside in Canada are not subject to U.S. tax on this income.

These Canadian benefits are treated as U.S. social security benefits for U.S. tax purposes. Thus, under section 86 of the Internal Revenue Code, the portion of the benefits that is taxable will depend on your income and filing status. If your modified adjusted gross income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax. Refer to Tax Topic 423 for information about determining the taxable amount of your benefits. Any benefit under the social security legislation of Canada that would not be subject to Canadian tax if paid to a resident of Canada is not subject to U.S. tax.

Canadian benefits that are treated as U.S. social security benefits are reported on Form 1040 (PDF), U.S. Individual Income Tax Return or Form 1040A (PDF).

References:

• Publication 519, U.S. Tax Guide for Aliens
• Publication 597, Information on the United States-Canada Income Tax Treaty
• Publication 915, Social Security and Equivalent Railroad Retirement Benefits
• Tax Topic 423, Social Security and Equivalent Railroad Retirement Benefits