US/Canadian tax treaty and US Pension?

Question

My husband and I are both US citizens who are interested in moving to Montreal Canada. My husband is afraid of being double taxed on his pension and Social Security benifits. How would the tax treaty affect his income? How can we figure out how much tax he will pay while in Canada? I am not currently working but will seek work after landing in Canada.

Answer 1

If you move to Canada, then as a resident of Canada you are subject to Canadian tax on your worldwide income, including social securitiy benefits. However, you will likely be able to claim any US taxes paid as a credit against the Canadian taxes owing. Since Canadian tax rates are generally higher than the US rates, you will have to pay the difference to Canada.

Also, 15% of your social security income is considered tax free in Canada under the treaty.

To estimate how much tax you will pay, try the following link:
http://www.walterharder.ca/T1.html

I recommend consulting with a tax professional as cross border tax issues can be quite complex.

Answer 2

I suggest you'd best ask the Canadians if they'll let you work in Canada before you get too committed to this. Last I heard, the likely answer was "non".

Further, unless the tax treaty in question covers it [I don't know], your husband will discover that US Medicare does not cover care rendered outside the US -- which means that if he needs to see a doctor, you'll be driving 75 minutes to Plattsburg, NY plus waiting out the immigration and customs queue [which was an hour wait last week] or else paying cash for health care in Canada.

GL ... you need a lot more informtion.

Answer 3

From what I understand of this document, you are only taxed on one side of the border or the other. Both countries cannot claim tax. I would likely check with a tax lawyer to be sure.