Toronto, ON – June 6, 2025 – Cardinal Point Wealth Management, a leading cross‑border financial advisory firm, today released a timely and important educational overview to help Americans living in Canada and Canadians living in the US understand how new 2025 rules impact taxation and coordination of US Social Security, Canada Pension Plan (CPP), and Old Age Security (OAS) benefits. Drawing on four decades of bilateral agreements and recent legislative changes, Cardinal Point underscores practical steps retirees and near‑retirees can take to avoid double taxation and maximize lifetime income.
Since 1984, the Canada‑US Totalization Agreement has allowed workers who divide their careers between the two countries to “totalize” contribution periods, making it easier to qualify for benefits on both sides of the border. While the legal framework is familiar, 2025 brings several new considerations. These include higher‑than‑average US Social Security cost‑of‑living adjustments, the recent elimination of the Windfall Elimination Provision and Government Pension Offset for beneficiaries who also receive CPP, and enhanced electronic information‑sharing between the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS).
Key Findings for 2025 Retirees
Exclusive Taxation Rights Remain Intact: Under Article XVIII(5) of the Canada–US Income Tax Treaty, US Social Security is taxable only in Canada when the recipient resides north of the border, while CPP and OAS are taxable only in the United States when the recipient resides south of the border. In both cases, up to 85 percent of the benefit is included in taxable income in the taxing country.
Eligibility Gaps Can Still Be Closed: The 40‑quarter US requirement and CPP residency rules continue to be bridged by totalization. A US citizen with six years of covered earnings in the United States, for instance, can apply Canadian CPP credits to reach the 10‑year threshold for Social Security eligibility—though the benefit is calculated solely on US earnings.
Reporting Obligations Persist: Dual citizens must still file annual returns with both agencies. Even when a treaty exempts the income from tax, Form 8833 (Treaty‑Based Return Position) may be required to preserve the exemption.
State and Provincial Surcharges Differ: California, New York, and several other US states conform to federal treatment of foreign pensions, but each applies its own marginal rates. Likewise, high‑tax Canadian provinces such as Ontario or Quebec will stack provincial levies on top of the federal inclusion rate.
Practical Planning Strategies
Confirm Tax Residency Early: Remote work, seasonal migration, and extended travel can blur residency status. Maintaining clear day‑count records and filing consistency prevents unexpected tax bills.
Coordinate Claim Dates: Deferring CPP or OAS while commencing US Social Security—or vice versa—may improve after‑tax cash flow, especially for families straddling the border.
Leverage Currency Management: Holding accounts in both CAD and USD and timing conversions during favorable exchange rate windows can shield purchasing power against adverse currency swings.
Integrate Healthcare Costs: Both Medicare premiums and provincial healthcare eligibility hinge on contribution history and residency. Aligning benefit start dates with medical coverage thresholds helps avoid coverage gaps.
Seek Specialist Advice: Cross‑border tax software cannot always account for treaty overrides, provincial‑state interactions, or estate‑tax mismatches. Engaging a credentialed cross‑border financial advisor increases the likelihood of accurate projections and compliance.
Elevated Urgency for Retirees
“Retirement decisions have always been high‑stakes, but 2025 adds a layer of urgency,” said Kris Rossignoli, Senior Private Wealth Manager at Cardinal Point Wealth Management. “With the Social Security Fairness Act eliminating WEP and GPO reductions and governments exchanging data more seamlessly, retirees need to revisit plans they made even a few years ago. Our goal is to raise awareness so individuals can capture every dollar of benefit they have earned—without incurring avoidable tax.”
Historical Context
Since the Totalization Agreement took effect on August 1st, 1984, more than 600,000 workers have relied on combined US and Canadian credits to qualify for retirement benefits. Although no comprehensive overhaul has been enacted since 2004, incremental updates—from electronic record‑keeping to refinements in survivor benefits—require vigilant monitoring. The 2025 environment reflects demographic shifts as baby boomers transition fully into retirement and digital nomads accumulate multi‑jurisdictional work histories.
Looking Ahead
Both Ottawa and Washington continue to evaluate pension sustainability and cross‑border labor mobility. Proposals under discussion—such as aligning CPP early‑claim discounts more closely with US actuarial factors or expanding cross‑border electronic filing waivers—could further streamline retiree compliance. Cardinal Point Wealth Management will continue to publish periodic briefs as new guidance emerges.
About Cardinal Point Wealth Management
Cardinal Point Wealth Management is an independent firm specializing in cross‑border wealth management for Americans living in Canada and Canadians living in the U.S. The firm’s team of credentialed cross‑border financial advisors integrates tax, retirement, and investment planning to help clients thrive on both sides of the border.
Disclaimer: This press release may contain forward-looking statements. Forward-looking statements describe future expectations, plans, results, or strategies (including product offerings, regulatory plans and business plans) and may change without notice. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements.
Media ContactCompany Name: Cardinal Point Wealth Management, ULCContact Person: Kris Rossignoli, Senior Private Wealth ManagerEmail: Send EmailCountry: United StatesWebsite: http://www.cardinalpointwealth.com/
