My_question_is: Applicable to both US and Canada
Subject: Social Security taxable?
Expert: taxman at centa.com
Date: Friday November 25, 2005
Time: 08:27 AM -0800
QUESTION:
David I found this technical sheet at CCRA which seems to point
to Social security contributions as taxable.
http://www.cra-arc.gc.ca/E/pub/tp/itnews-31r/itnews-31r-e.html#P2
1_777
Would this indicate that People living in Canada and working in
the US would have to now add there FICA deductions as income?.
-------------------------------------------------
david ingram replies:
No it does not. It specifically STATES THAT THEY ARE STILL
DEDUCTIBLE
You have to look at the little paragraph which is included in the
Technical News Bulletin 31R.
After clearly stating that they are not a foreign tax credit
"because", they then put in an "HOWEVER" clause.
I quote:
"As provided in the Canada-U.S tax convention however, Canada has
specifically agreed to give a foreign tax credit for payments
under the Federal Insurance Contributions Act, more commonly
known as FICA taxes. In accordance with our tax treaty with the
U.S., the CRA will continue to allow a foreign tax credit for
FICA taxes."
What this year old bulletin says is that French and German Social
Security payments will no longer be a credit. US FICA which is
commonly referred to as Social Security is still a credit.
What it really says is that social security paid to any country
will not be a credit unless it has been dealt with in a treaty as
with the US. One of my clients working in Algeria is paying big
time because of this.
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