Foreign Pension Income

What’s in this article?

 

What is this?

This is pension income you received in the year from another country. Foreign pension income must be reported on your income tax return in Canadian dollars. You can use the Bank of Canada exchange rate that was in effect on the day you received the pension. If you received the pension at different times in the year, you can use the average annual rate on Bank of Canada’s website.

If Canada or Québec has a tax treaty with the country the pension is from, you can claim a deduction for the portion of the pension that is tax-free. A tax treaty helps avoid double taxation and prevents tax evasion.

If you paid foreign taxes on your pension, you may be able to claim a foreign tax credit. Don’t subtract the taxes you paid from your income when you report it on your income tax return.

Common types of foreign pension income from the United States include the individual retirement arrangement (IRA) and the US social security. If you received amounts from IRA or converted it to Roth IRA, you must contact the Canada Revenue Agency (CRA), or Revenu Québec if you are a Québec resident.

 

Am I eligible?

If you received foreign pension income, you must report amounts received on your income tax return in Canadian dollars.

You may have paid taxes on your pension to the government of a foreign country. If so, you may be able to claim a foreign tax credit on the pension income amount. Click this link for more information on claiming a foreign tax credit. If you are a Québec resident, click this link for more information.

If there is a tax treaty in place with the country from which you received pension income, you may be able to claim a deduction on the part of the pension that is tax-free. Click this link for more information. If you are a Québec resident, click this link for information on claiming a deduction on income that is exempt under a tax treaty.

 

Where do I claim this?

Follow these steps in H&R Block’s tax software to file your 2015 taxes:

1. Click the PREPARE tab.
2. Click the YOUR YEAR IN REVIEW icon. You will find yourself here:


3. Click the checkbox labelled I received retirement income or I was retired or over 65.
4. Scroll to the bottom of the page and click Continue.
5. Click the RETIREMENT INCOME icon. You will find yourself here:


6. Under the RETIREMENT heading, click the checkbox labelled Foreign pension income.
7. Scroll to the bottom of the page and click Continue.

When you arrive at the appropriate page for claiming your Foreign pension income, enter your information into the tax software.

 

Where can I learn more?