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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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How do you claim a Canada old age pension and a British old

Resolved Question:

How do you claim a Canada old age pension and a British old age pension on the U.S.
tax form? I have information from Canada ( NR4-OAS) But no paper work from Great Britian. I can not find a tax soft ware that will handle this. Is there one? Or how would I do it. I would like to e- file if I could. Can you please help me?!
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

Foreign pensions are generally reported on the form 1040 lines 16a and 16b - the same way as pensions from US sources.

LEV :

However - we need to verify if your pensions are taxable.

LEV :

Pensions paid by, or funds created by, the United Kingdom, its political subdivisions, or local authorities for services performed for the United Kingdom are exempt from U.S. income tax unless the recipient is both a resident and citizen of the United States.

Customer :

My question is about not how to report it on the form as I already know that.
But not having the information available to file. They want a Federal ID number which is not on the Canada paperwork and with no paperwork supplied by Britan it leaves me with no avanue to file.

LEV :

Under Article XVIII, pensions and annuities from Canadian sources paid to U.S. residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Canadian pensions and annuities paid to U.S. residents may be taxed by the United States, but the amount of any pension included in income for U.S. tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident.

Customer :

I am a US citizen and live in the US so it is taxable.

LEV :

You do not need tax IDs for foreign payers to file your tax return. But you will not be able to file electronically.

Customer :

OK- now what about Britan that supplies no paperwork? Will the IRS kick out the return because there will not be a 1099 attached?.

LEV :

You do not need to attach 1099 forms to your tax return

Customer :

So, you are saying I don't need to supply information where the money comes from? Like in the old days you had to staple copies of W-2's to the return.

LEV :

You need to attach W2 forms, but not 1099 forms.

Customer :

OK I will try that and see what happens.

Customer :

I hope I undestand what you are telling me.

LEV :

You may add a note to your tax return with explanation of where your taxable income coming from - but do not need to attach any documents to your tax return unless you are specifically asked for that or audited.

Customer :

Do I have to claim the British Pension on my Federal Return because I don't have to file a return for Canada?

LEV :

See here - http://www.irs.gov/businesses/article/0,,id=187083,00.html


Just as with domestic pensions or annuities, the taxable amount generally is the Gross Distribution minus the Cost (investment in the contract). Income received from foreign pensions or annuities may be fully or partly taxable, even if you do not receive a Form 1099 or other similar document reporting the amount of the income.

LEV :

If you determined that is your taxable - yes - you need to include that amount.

Customer :

That answers my question . Thank you for your help.

Lev and other Tax Specialists are ready to help you
Expert:  Lev replied 6 years ago.

Some additional information and corrections.

According to the US-Canada tax treaty - http://www.irs.gov/pub/irs-trty/canada.pdf

5. Benefits under the social security legislation in a Contracting State paid to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

So Canadian Old Age Security benefits paid under the social security legislation are not taxable in the US.



Edited by LEV on 2/6/2011 at 4:28 AM EST