Crossborder Pension Question of the Week: Can a U.S. Citizen Collect Survivor Pension from a Deceased Canadian Husband?
Written by Carson Hamill CIM®, CRPC®, Associate Financial Advisor & Assistant Branch Manager & Dean Moro BComm, CIM®, Financial Advisor & Associate Portfolio Manager
Navigating the complexities of cross-border benefits can be challenging, especially when dealing with social security systems from two different countries. This week, we address a common concern for many living across North American borders:
Question:
I'm a U.S. citizen living in the United States and collecting Social Security. My husband, a deceased Canadian citizen, has already been approved for a survivor pension from Canada. Can I collect his social security?
Answer:
Yes, as a U.S. citizen, you can collect survivor benefits from your deceased Canadian husband's social security, under certain conditions. Here’s a breakdown of what you need to know:
Understanding Survivor Benefits in Canada
In Canada, survivor benefits are part of the Canada Pension Plan (CPP). These benefits are designed to provide financial support to the spouse or common-law partner of a deceased CPP contributor. As you mentioned, you have already been approved for the survivor pension from Canada, which is a good start.
Eligibility for Canadian Survivor Benefits
To be eligible for Canadian survivor benefits, the deceased must have made contributions to the CPP, and the surviving spouse must meet specific criteria regarding their relationship status and residency. Since you are approved, it indicates that these criteria have been satisfied in your case.
Collecting Benefits as a U.S. Citizen
Being a U.S. citizen does not disqualify you from receiving Canadian survivor benefits. The CPP provides benefits to eligible individuals regardless of their nationality or country of residence. As long as you have been approved, you should be able to receive these payments in the United States.
Implications for U.S. Social Security
The Social Security Administration (SSA) in the U.S. has agreements with several countries, including Canada, to coordinate benefits under the social security systems of both countries. This arrangement is part of the U.S.-Canada Totalization Agreement, which helps avoid dual coverage and ensures that individuals do not lose out on benefits if they have worked in both countries.
Key Points to Consider
- Dual Benefits
- You can receive survivor benefits from Canada and your own Social Security benefits from the U.S. simultaneously. These benefits are independent of each other.
- Windfall Elimination Provision (WEP):
- The WEP may apply if you also receive a pension from work not covered by U.S. Social Security. However, Canadian survivor benefits are generally not considered as such, so WEP should not reduce your U.S. Social Security benefits.
- Reporting Requirements:
- It’s crucial to report your Canadian survivor benefits to the SSA. Although this typically does not affect your U.S. Social Security benefits, full disclosure ensures compliance and avoids any potential issues.
- Tax Implications:
- Be aware that you may need to report your Canadian survivor benefits on your U.S. tax return. Consult with a tax advisor to understand the implications and ensure proper filing.
Steps to Take
- Contact the SSA:
- Inform the SSA about your Canadian survivor benefits to ensure your U.S. Social Security record is accurate.
- Set Up Direct Deposit:
- Arrange for direct deposit of your Canadian survivor benefits into your U.S. bank account, if not already done.
- Consult a Tax Advisor:
- Seek advice on how to report these benefits on your U.S. tax return.
Navigating cross-border social security benefits can be complex, but with the right information and guidance, you can ensure you receive all the benefits to which you are entitled. Always stay informed about both countries' requirements to maximize your financial security.
Feel free to reach out with more cross-border questions for future posts. We’re here to help you navigate these intricate systems!
About Snowbirds Wealth Management
Gerry Scott is a portfolio manager and founder of Snowbirds Wealth Management, an advisory firm focussed on the cross-border market. Together with Dean Moro and Carson Hamill, associate portfolio managers with Snowbirds Wealth Management, they provide investment solutions for Americans living in Canada, and Canadians residing in the United States. Licensed in both Canada and the US, they provide tailored investment solutions to minimize the tax burden when moving assets across borders.
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