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12945: 1040 - Canadian Retirement Income


1040 Individual

How do I enter retirement income from the Canada Pension Plan, the Old Age Security plan, or from Canadian Registered Retirement Savings Plans or Registered Retirement Income Funds?


Per the Top Frequently Asked Questions for U.S. Aliens and Citizens Living AbroadCanada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) plan benefits paid to a US resident are treated as US social security benefits:

"The taxation of payments received from Canadian retirement programs that are similar to the U.S. Social Security system receive special tax treatment due to an income tax treaty between the United States and Canadian governments. The way this income is taxed depends on the recipient’s residence.

The special tax treatment applies to payments receive from the following Canadian retirement programs: Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS)

If the recipient is a resident of the United States, the benefits:

  • are taxable only in the United States,
  • are treated as U.S. social security benefits for U.S. tax purposes, and
  • are reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040A) on the line on which U.S. social security benefits would be reported.

If the recipient is a U.S. citizen or lawful permanent resident (green card holder) who is a resident of Canada, the benefits are taxable only in Canada."

These benefits may be entered on screen 3, line:
  • 6a starting in Drake20
  • 5a in Drake18 and 19
  • 20a in Drake17 and prior

The taxable portion is calculated by the program starting with Drake18. In Drake17 and prior, the taxable portion should be entered on line 20b

Note: The IRS has eliminated Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans. Taxpayers are no longer required to file this form for any year, past or present (see the 10/7/2014 IRS announcement IR-2014-97 IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements and Rev. Proc. 2014-55). Drake14 is the last year that the form is available in the software.

Foreign pensions from other foreign payors may be entered on the FEC screen. 

See Publication 915 for details.


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