There are two possible places to enter Canadian sourced retirement income in the TaxAct program.

• In the Social Security section to transfer to IRS Form 1040 U.S. Individual Income Tax Return, Lines 5a and 5b.
• On the worksheet FEC Foreign Employer Compensation and Pensions to transfer to Lines 4c and 4d of Form 1040.

Canadian-source retirement income

By provision of the income tax treaty between the U.S. and Canada, benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident are taxable, if at all, only in the United States.

These Canadian benefits are treated as U.S. social security benefits for U.S. tax purposes. Thus, under section 86 of the Internal Revenue Code, the portion of the benefits that is taxable will depend on your total income.

If your total income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax.

Canadian benefits that are treated as U.S. social security benefits are reported on Lines 6a and 6b on Form 1040.

To enter this information in the TaxAct program:

1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
2. Click Social Security Benefits, and continue with the interview process to enter your information.

If your Canadian retirement income does not meet the provisions of the income tax treaty between the U.S. and Canada (benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program) to be taxable to a U.S. resident as U.S. social security benefits for U.S. tax purposes, you will need to enter the information on the FEC worksheet.

To enter the retirement income on the worksheet:

1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
2. Click the Retirement Plan Income dropdown, then click Foreign pension distributions.
3. Click + Add Form 1040 FEC to create a new copy of the form or click Edit to edit a form already created (desktop program: click Review instead of Edit).
4. Continue with the interview process to enter your information.

The FEC worksheet is not an IRS form but is a worksheet provided only in the TaxAct program used to collect the information and transfer it to the appropriate place on the return. All information entered on the worksheet is transmitted with the return if it is electronically filed. If the return is paper filed, there is no documentation required to be sent with the return. The IRS will contact the taxpayer if they need any additional information on the amount entered on the return for foreign retirement income. If you still want to print the FEC worksheet to mail with the return, go to our Printing Your Return and Individual Forms FAQ.

Related Links

• Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad
• Publication 597 Information on the United States–Canada Income Tax Treaty
• Publication 901 U.S. Tax Treaties

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.