Social Security vs Canada Pension Plan

I understand better what you are saying, but I don't see a problem.

There is a problem. CPP and Canadian private pensions are treated quite differently both by US taxes, WEP and Canada - see below.

..... While you were in Canada, you didn't pay SS contributions, so.....

In the US/Canada SS agreement US recognizes CPP as equivalent to US SS: 1. The agreement removes the "double taxation" - having to pay US SS taxes on Canadian earnings and CPP taxes at the same time. 2. IRS treats my CPP income same as US SS income at a reduced tax rate.

If US recognizes CPP equivalent to US SS it should then recognize "extra" private pensions on top of CPP taxes in Canada as the equivalent of "extra" private pensions in US and not include them in WEP. Again: Canada does not tax my CPP benefits before it gets to me in US but Canada taxes the private pension 15% before it gets to me in US and yet US applies WEP to 100% to that private pension. Why not eliminate this double taxation by both countries by at least not applying WEP to Canada private pensions. Note: Canada does not have WEP equivalent even though it does income averaging on CPP.

WEP is a windfall for US when it applies to Canada private pension plans.

You'll never get any argument from me that WEP is anything other than a pure money-grab by the Gov't. However...

CPP and Canadian private pensions are treated quite differently both by US taxes, WEP and Canada - see below

By canada? yes.
By IRS? yes
BY WEP? Absolutely not.

For others who might be interested:

[*]Canada used to tax CPP for US residents, but a change in the 80's to the tax treaty, not the totalization accord, fixed this. It's a tax issue, not a WEP issue. Unfortuantely, it is unlikely that Canada will ever give up its taxation rights on Cdn-sourced pensions. The best we can hope for is a reduction in the NR rate (don't hold your breath)

[*]IRS treats CPP (and OAS) like it treats SS, by giving 15% off the top deduction. It does not give this break to any pensions, foreign or otherwise.

[*]WEP however, treats your both Cdn private pension and your CPP exactly the same: as pensions earned by you while working at a job(s) in which SS was not collected. It uses the entire amount of both to determine how much to lopp off your SS.

Industry has tried (mostly unsuccesfully) to argue that Cdn employment should be treated as equivalent to US employment to satisfy the "30 years of substantial income" clause in WEP, but has not been successful. Even ajudge has stated that -- while unfair -- the totalization agreement just doesn't apply to WEP.

Out of curiosity, how much of your 15% NR tax are you able to use each year? (My guess would be only 6-7 % ).
Have you tried to use section 217 to reduce your Cdn tax, or do you have too much other income?

Very useful discussion. Thank you.
Can I assume that all information about how SSA treats CPP when a recipient leaves in US (reducing SS by amount received from CPP) is also applied to someone who lives in Canada? For example, if I have 40 credits in US and some years of work in Canada and will retire in Canada, will CPP part be also deducted from SS?

Yes, Windfall Elimination (WEP) applies to any pension recieved from work not covered by SS, regardless of where you are living.

The only time WEP does not apply is if you have paid into SS less that 10 years, or more than 30 years.

This is a bit strange (or I do not understand it correctly). Basically it means that during my work in Canada, for 7 years, I did not earn any pension benefits.
Thank you.

Not quite.

You will get CPP, and there will not be a 1 to 1 dollar reduction for your CPP.

[quote][/quote][quote="flames9"]I'm a RN, Just last week i was having a laugh with 1 of my pts! Once he found out I was CDN ( I work /live in USA), he thanked me for the $67 each month he got from the Cdn gov't, because years and years ago he had worked in Ontario for just over a year! He stated he never even expected that. And he collects his USA Social security too!![/quote]
[quote][/quote].

My elderly cousin and his wife worked in Canada for a year after the world. Would they eligible for any Canadian pensions? How would they go about checking please. Any help appreciated.

My elderly cousin and his wife worked in Canada for a year around about the 1950s - just out of interest, would they be entitled to any pension?

If they paid into CPP, then probably. But since CPP only started in 1966, this is unlikley. They would not be eligible for OAS unless they lived in canada fpr 2-0 years as adults.