ARCHIVED – U.S. social security benefits

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1. What was changed with respect to Canadians receiving U.S. social security benefits?
2. I am currently receiving U.S. social security benefits*. Am I eligible for the new deduction?
3. How are my U.S. social security benefits currently treated for tax purposes?
4. I did not start receiving my U.S. social security benefits until after 1995. Am I eligible for the new deduction?
5. I started to receive my U.S. social security benefits in 1993, but I did not immigrate to Canada until 1997. Am I eligible for the new deduction?
6. I began to receive U.S. social security benefits starting in 1994, but I did not immigrate to Canada until 1995. Since then, I have continued to be a resident of Canada. Am I eligible for the new deduction?
7. If I am eligible for the new deduction, how do I complete my tax return?
8. I am eligible for the new deduction. Will my income-tested credits and benefits be affected?
9. Where can I get more information?

1. What was changed with respect to Canadians receiving U.S. social security benefits?

For U.S. social security benefits received in 2010 and subsequent years, the budget proposes to allow eligible residents to deduct an extra 35% of the benefits in addition to the existing 15% deduction allowed in accordance with the current Canada-U.S. tax treaty. This allows for a combined deduction of 50%.

2. I am currently receiving U.S. social security benefits*. Am I eligible for the new deduction?

You will be eligible for the new deduction, starting in 2010, if you have been resident in Canada and receiving these benefits* continuously since before 1996.

You may also be eligible for the new deduction if you are receiving U.S. social security benefits* in respect of your deceased spouse or common-law partner who received benefits* prior to 1996. In this situation, the following criteria must be met:

• the deceased was your spouse or common-law partner immediately before the time of death;
• the deceased had, continuously during a period starting before 1996 and ending immediately before the time of death, been resident in Canada and receiving benefits*; and
• you have, continuously since his or her death until now, been a resident of Canada and entitled to receive such benefits*.

*To be eligible for the deduction, paragraph 5 of Article XVIII of the Canada-U.S. tax treaty must apply to the benefits when they are received.

3. How are my U.S. social security benefits currently treated for tax purposes?

Under the current Canada-U.S. tax treaty, if you are a Canadian resident, you may deduct an amount equal to 15% of the U.S. social security benefits (including tier 1 railroad retirement benefits, but not including unemployment benefits) you included in income in the year.

4. I did not start receiving my U.S. social security benefits until after 1995. Am I eligible for the new deduction?

No. The deduction is not available if you started to receive benefits after 1995. However, you are entitled to the 15% deduction allowed under the current Canada-U.S. tax treaty.

5. I started to receive my U.S. social security benefits in 1993, but I did not immigrate to Canada until 1997. Am I eligible for the new deduction?

No. The deduction is not available because you were not resident in Canada continuously from before 1996 until now. However, you are entitled to the 15% deduction allowed under the current Canada-U.S. tax treaty.

6. I began to receive U.S. social security benefits starting in 1994, but I did not immigrate to Canada until 1995. Since then, I have continued to be a resident of Canada. Am I eligible for the new deduction?

Yes.

7. If I am eligible for the new deduction, how do I complete my tax return?

The current 15% deduction for U.S. social security benefits received by a Canadian resident is reported on line 256 of the tax return. If you are eligible for the new deduction, beginning in 2010 you will be able to claim the additional 35% deduction (50% in total) on line 256.

8. I am eligible for the new deduction. Will my income-tested credits and benefits be affected?

No. As the new deduction is used in the calculation of taxable income, it will not affect your income-tested credits and benefits.

9. Where can I get more information?

The CRA is committed to providing taxpayers with up-to-date information. Taxpayers are encouraged to visit our Web site often. All new forms, policies, and guidelines will be posted there as they become available.

Date modified:

2015-07-15