CPP and OAS After Moving to the US: Both Are Payable, Only the US Taxes Them, and OAS Escapes the Clawback

Short version: Old Age Security for Non-Residents of Canada Explained · Canadian Retirees in Florida: Who Taxes What

For retirement benefits, moving to the US is one of the better things a Canadian can do to their tax bill. The mechanics: CPP (and QPP) and OAS continue to be paid to non-residents — CPP without residence conditions, OAS payable abroad indefinitely once you have 20 years of Canadian residence after age 18 (with the totalization agreement helping those short of it). Taxation is governed by the treaty's social security paragraph, Article XVIII(5): benefits under the social security legislation of one country paid to a resident of the other are taxable only in the residence country. So Canada does not tax or withhold on CPP/OAS paid to a US resident — no Part XIII, nothing — and the US taxes them under its own Social Security benefit rules, which means at most 85% of the benefit is included in income, with the actual inclusion sliding down to zero at modest income levels. Two bonuses follow from the same structure. The OAS recovery tax (the clawback that erodes OAS above an income threshold) can reach non-residents in general, but the same Article XVIII(5) rule — OAS taxable only in the country of residence — relieves US residents from it, so a high-income US resident keeps full OAS that a Canadian resident with identical income would lose. And US states generally follow the federal Social Security treatment or exempt retirement income broadly, with the no-tax states making the benefits entirely tax-free at the state layer. The planning that remains is the ordinary kind: when to start each benefit, how they stack with Social Security earned from US work years, and keeping the paperwork (direct deposit, non-resident status with Service Canada) aligned.

Key takeaways

• Payability: CPP pays anywhere, period. OAS pays abroad with 20+ years of post-18 Canadian residence; under 20 years, the US–Canada totalization agreement can qualify the payments — and partial OAS reflects the residence years either way.
• Taxation — Article XVIII(5): taxable only in the residence country. Canada withholds nothing on CPP/OAS to a US resident; the US taxes the benefits under its Social Security inclusion rules — 0%, 50%, or up to 85% of the benefit included depending on provisional income.
• No OAS clawback for US residents: the recovery tax is a Canadian tax on OAS, and the treaty makes OAS taxable only where you now reside — so a US-resident retiree with income far above the threshold is relieved from it and keeps full OAS. For high-income retirees this alone is worth thousands a year versus staying.
• Stacking with US Social Security: years worked in each country earn each country's benefit; totalization fills qualification gaps in both directions; and the Windfall Elimination Provision that once reduced US Social Security for CPP recipients is repealed — the benefits now stack without the old haircut.
• Currency and logistics: both benefits deposit to US accounts in USD via Service Canada's foreign direct deposit; report them on the 1040 (converted, on the Social Security line per the treaty treatment) and nowhere on any Canadian filing.
• Start-age strategy runs on US after-tax math: CPP's deferral credits (to 70) and OAS's (to 70) are evaluated at your US marginal rates and Social Security inclusion tier — often more favorable than the Canadian-resident version of the same decision, precisely because the inclusion caps at 85% and the clawback is gone.

The residence-timing wrinkle

The clawback and withholding rules follow residence year by year: move in a year you already received OAS as a Canadian resident and that year's Canadian return still runs the recovery math on the resident-period benefits, with the treaty treatment beginning as US residence begins. Retirees flirting with the threshold sometimes time the move — or time income like RRSP withdrawals — around the residence switch, because the same dollar of income costs OAS on one side of the date and nothing on the other.

Worked example

A Windsor executive retires to Naples, Florida with maximum CPP (about C$17,000), full OAS (about C$9,000), a Social Security benefit from six US work years totalized to qualification, and C$120,000 a year of RRIF and investment income. As a Canadian resident, her income would claw back a large share of OAS and tax the rest at Ontario rates. As a Florida resident: Canada pays CPP and OAS gross — no withholding, no clawback, full OAS despite her income; the US includes 85% of the combined Canadian benefits and her Social Security in income at her federal rate; Florida adds nothing. Her RRIF draws run separately at 15% Canadian withholding as periodic payments, credited on her 1040. Net effect of the move on the benefits alone: the clawback she no longer suffers plus the rate difference — roughly C$8,000 a year — and her one administrative task was switching Service Canada to US direct deposit and confirming her non-resident status so no one withheld what the treaty says Canada shouldn't touch.

Official sources

Article XVIII(5) of the Canada-United States Tax Convention provides that social security benefits paid to a resident of the other country are taxable only in the residence country, and that in the case of United States social security benefits paid to a resident of Canada, fifteen percent of the benefit is exempt from Canadian tax. — Canada-United States Tax Convention, Article XVIII(5), https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997.html

The Social Security Administration explains that the totalization agreement between the United States and Canada helps people who have worked in both countries qualify for benefits by combining credits, and assigns coverage so that workers pay social security taxes to only one country for the same work. — Social Security Administration, Totalization Agreement with Canada, https://www.ssa.gov/international/Agreement_Pamphlets/canada.html

Practitioner note

CPP and OAS are the good-news meeting in every retire-south plan: payable, US-taxed at a capped inclusion, and — the line that always gets a reaction — clawback-free, because the treaty leaves OAS taxable only where you now live. The planning that earns its fee is sequencing: benefit start ages, RRIF draws, and the residence-switch year interact, and the version optimized at US rates rarely matches the one the Canadian-resident rules would have produced.

See also: Browse every cross-border tax topic guide, organized by situation.

Next step

Fairlight prepares the cross-border retirement benefits plan — CPP/OAS/Social Security stacking and start ages, the residence-switch year, and the US-side taxation setup. See cross-border pricing or book a call.