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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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Social Security Windfall elimination provision.

Resolved Question:

I have a question about the interaction between Canadian CCP and Social Security. (I'm not sure this is exactly a tax question, but it doesn't seem to match any of the other categories.) My wife qualifies small (Canadian) CPP payment from 13 years of living in Canada. She has 4 (U.S.) Social Security "quarters" and 6 Medicare "quarters", and is unlikely to get any more. When I become eligible Security, what is the interaction between our Social Security payments and her CPP payments?

Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

The U.S. has established a network of bilateral Social Security agreements that coordinate the U.S. Social Security program with the comparable programs of other countries. http://www.ssa.gov/international/agreement_descriptions.html

As we could see - there is an agreement between the U.S. and Canada - http://www.ssa.gov/international/Agreement_Pamphlets/canada.html

Part IV - the table shows the various types of Social Security benefits payable under the U.S. and Canadian Social Security systems and briefly describes the eligibility requirements type of benefit.

If you do not have enough work credits under the U.S. system to qualify benefits, you may be able to qualify partial benefit from the United States based on both U.S. and Canadian (CPP/ QPP) credits. However, to be eligible to have your Canadian credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify benefit, the United States cannot count your Canadian credits.

I hope that helps.

Customer: replied 6 years ago.

She qualifies on her own record (with either the U.S. recognizing her CPP credits or Canada recognizing her U.S. credits), and she would qualify spousal Social Security benefit on my record only. But would her CPP payments be offset against offset against her spousal Social Security payments, either under the "non-SS-covered pension" provision, or under the treaty? Or, since neither country's plan wants to be informed of the other's benefit; would there not be such an offset provision?

Expert:  Lev replied 6 years ago.

In other words - you concern if Windfall Elimination Provision (WEP) will affect your wife's Social Security benefits - that she will receive based on your earning record .

Please refer to the SSA Publication No. 05-10045 - http://www.ssa.gov/pubs/10045.pdf

Yes - her Social Security benefits may be reduced if she qualifies CPP.

Customer: replied 6 years ago.

Well, it's not exactly a (foreign) pension; it's a foreign Social Security system, so should only be offset under treaty provisions, rather than under the Windfall Elimination Provision or the Government Pension Offset. But, you're probably right.

Expert:  Lev replied 6 years ago.

The Government Pension Offset covers situation if a person is eligible government pension and Social Security benefits at the same time - so that is not your situation.

The US-Canada tax treaty covers situations ability of benefits - and not eligibility .

The US-Canada Social Security agreement provides - see above - that if the person doesn't have enough work credit to qualify security benefits - Canadian credits may be taking in consideration - that is exact your situation - because your wife doesn't have 40 US credits - she may add Canadian credits and would be qualify social security on her own record.

She may however apply benefits based on your record - and in this case you need to decide which way is more beneficial.

However if she is eligible CPP/ QPP benefits - she would be exactly under the Windfall Elimination Provision. - Please see the US-Canada Social Security agreement Part V -- A CPP/QPP pension may affect your U.S. benefit

If you qualify Security benefits from the United States based only on U.S. credits and a CPP/QPP benefit from Canada, the amount of your U.S. benefit will be reduced. This is a result of a provision in U.S. law which can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. Receipt of a Canadian Old-Age Security pension, which is based on residence in Canada, will not affect the way your benefit is figured. information, call our toll-free number, 1-800-772-1213, and ask publication, Windfall Elimination Provision.

There are probably lots of people who receive foreign pensions (equivalent of US SS benefits) and do not inform Social Security Administration to avoid the affect of the Windfall Elimination Provision.

However - because of the US-Canada Social Security agreement - I believe that SSA might exchange the information with Canada.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 25065
Experience: Taxes, Immigration, Labor Relations
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