Are the Canada Pension Plan and Canadian Old Age Security benefits taxable

Yes, the Canada Pension Plan (CPP) and Canadian Old Age Security (OAS) benefits are taxable. The taxation of these benefits depends on the recipient's residence.

1. U.S. Residents Receiving Canadian Benefits:
   • Taxable Only in the United States: If the recipient is a resident of the United States, the benefits are taxable only in the United States.
   • Treated as U.S. Social Security Benefits: For U.S. tax purposes, these benefits are treated as U.S. Social Security benefits.
   • Reporting: They should be reported on Form 1040, U.S. Individual Income Tax Return (or Form 1040-SR) on the line where U.S. Social Security benefits would be reported.
2. U.S. Citizens or Lawful Permanent Residents Residing in Canada:
   • Taxable Only in Canada: 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.

For more detailed information, refer to IRS Publication 915, which provides guidance on the taxation of social security benefits and equivalent railroad retirement benefits, and IRS Publication 597, which discusses the U.S.-Canada income tax treaty.

Sources:
Publication 597
Publication 915 (2023)
PMTA 01152
Rev. Rul. 62-179
Rev. Rul. 68-411
Notice 98-23