New Tax Treatment for U.S. Social Security Benefits

Effective January 1, 1996, the Canada-United States Tax Convention was modified to require Canadian residents to include 85% of U.S. Social Security benefits received in taxable income. This was an increase from the previous 50% inclusion rate.  Budget 2010 proposed to reduce the inclusion rate to 50 per cent for Canadian residents who have been receiving U.S. Social Security benefits since before January 1, 1996 as well as for their spouses and common-law partners who are eligible to receive survivor benefits.  This measure will apply to U.S. Social Security benefits received on or after January 1, 2010.

This is good news and the additional cash flow can be funnelled into a Tax Free Savings Account or used to purchase long term care insurance.

Comments Off on New Tax Treatment for U.S. Social Security Benefits   |   Posted in Financial Planning for Business Owners,Long Term Care Insurance,Tax Planning November 19, 2010

Comments are closed.