In a recent video, Mohammad Akif, a CPA, provides an in-depth explanation on whether Canadians living in the United States are eligible to receive the Canadian Pension Plan (CPP) and Old Age Security (OAS) benefits. This article summarizes the key points discussed in the video.
Introduction to CPP and OAS
- Canadian Pension Plan (CPP): A pension program similar to the US Social Security system. If you have worked in Canada and made contributions to the CPP, you are eligible to receive pension benefits regardless of how long you lived in Canada.
- Old Age Security (OAS): A social program providing benefits based on residency in Canada. To qualify, you must have lived in Canada for at least 20 years after turning 18. The maximum benefit requires 40 years of residency.
Eligibility for Canadians Living in the US
- CPP Eligibility: As long as you have contributed to the CPP, either directly or through an employer, you are eligible for CPP benefits. The amount is not dependent on the number of years lived in Canada.
- OAS Eligibility: You can receive OAS if you have lived in Canada for at least 20 years after the age of 18. Some exceptions allow for counting years worked abroad for a Canadian employer. To receive the maximum OAS benefits, 40 years of residency is required.
Additional OAS Programs
- Supplemental Programs: OAS includes additional benefits such as the Guaranteed Income Supplement (GIS) and Allowance for the Survivor. However, these supplemental benefits require residency in Canada, meaning US residents are not eligible for them.
Receiving Benefits in the US
- Currency and Payments: CPP and OAS benefits can be received in the currency of your resident country, such as USD for US residents, deposited into a US bank account. The exchange rates are fair, and the CRA (Canada Revenue Agency) provides a list of countries where these benefits can be received in local currencies.
Tax and Reporting
- Tax Treaty Benefits: Under the US-Canada tax treaty, CPP and OAS benefits have no withholding tax for US residents, eliminating the usual 25% withholding rate.
- US Tax Reporting: CPP and OAS benefits must be reported on the US tax return (Form 1040). CPP is treated similarly to US Social Security, with only 85% of the benefits being taxable. Form 8833 is used to claim treaty benefits and ensure proper tax reporting.
Summary
US residents can receive Canadian pension benefits under certain conditions. CPP eligibility is straightforward, depending mainly on contributions made during employment in Canada. OAS eligibility depends on the duration of residency in Canada. The benefits can be received in USD and are subject to US tax reporting rules, taking advantage of the US-Canada tax treaty.
For any specific questions or further clarification, viewers are encouraged to contact Mohammad Akif at his firm or through the contact information provided in the video.
