Cross-Border (US/CAN)
U.S. Social Security
The U.S. federal retirement, survivor, and disability program funded by FICA payroll taxes. U.S. citizens and certain qualifying non-citizens with at least 40 quarters (~10 years) of covered U.S. work generally qualify for retirement benefits. Under the Canada–U.S. Totalization Agreement, work credits from CPP and Social Security can be combined to meet the 40-quarter threshold. For Canadian residents receiving U.S. Social Security, the Canada–U.S. Tax Treaty assigns taxation to Canada (no U.S. tax withheld), with 15% of the benefit exempt under Article XVIII. Note: the Windfall Elimination Provision (WEP), which historically reduced Social Security benefits for retirees with non-covered foreign pensions like CPP, was repealed by the U.S. Social Security Fairness Act in January 2025.
Related terms in Cross-Border (US/CAN)
A U.S. employer-sponsored, tax-deferred retirement plan funded by employee salary deferrals (often with an employer match). Contributions reduce current-year U.S. taxable income; growth is tax-deferred until withdrawal. Conceptually similar to a Canadian RRSP. The cross-border question for Canadians who lived or worked in the U.S. is usually whether to leave a 401(k) in place, transfer it to an RRSP under the Canada–U.S. Tax Treaty, or eventually draw it down — each path has different tax and reporting consequences.
U.S. legislation that requires foreign financial institutions (including Canadian banks and brokerages) to report accounts held by U.S. persons to the IRS, via the CRA under an inter-governmental agreement.
An annual U.S. report that U.S. persons must file if the aggregate balance of their foreign (including Canadian) financial accounts exceeded USD $10,000 at any point in the year. Penalties for non-filing are severe.
A credit that lets a taxpayer offset tax already paid to one country against tax owed on the same income in another country, so the same dollar isn't taxed twice. On the Canadian side, the CRA grants a federal (and provincial) foreign tax credit for non-business income tax paid to the U.S., capped at the Canadian tax that would otherwise be owed on that income. On the U.S. side, the IRS grants a foreign tax credit (claimed on Form 1116) for Canadian tax paid. Cross-border planning generally tries to make sure the higher-tax country gets paid first so the FTC in the lower-tax country fully absorbs the duplicate liability.