Pension Income Splitting After Moving to the U.S.
Why Canadian pension splitting ends, the U.S. joint return that replaces it, and split-residence couples
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Canadian retirees often split eligible pension income with a spouse on Form T1032 to lower their combined tax. Splitting requires both spouses to be Canadian residents, so it ends with a move to the United States. There, married couples file a joint return with a similar effect, and Canadian pensions are U.S.-taxed with a credit for Canadian withholding.
On this page
What changes
| Item | Before the move (Canada) | After the move (U.S. residents) |
|---|---|---|
| Income splitting | T1032 — up to half of eligible pension income | Joint return — all income combined at joint brackets |
| RRIF and pension payments | Canadian tax at graduated rates | Canadian withholding (15 percent periodic — the Part XIII guide); U.S. tax with a foreign tax credit |
| CPP and OAS | Canadian tax | Taxed only in the U.S. (the OAS guide) |
| Pension credit | Canadian pension income amount | None in the U.S. |
Split-residence couples
If one spouse stays in Canada and the other moves, T1032 splitting isn't available — both spouses must be resident in Canada on December 31 (or at death); the U.S. spouse may file jointly with the nonresident spouse only by election (the nonresident spouse guide).
The departure year
Splitting isn't available for the departure year at all — the residency test applies on December 31, not to the part of the year before the move (ITA s.60.03(1)). The last T1032 is for the last year both spouses were resident on December 31.
Frequently asked questions
Can I split pension income after moving to the U.S.?
Not in Canada — T1032 requires Canadian residency; in the U.S., a joint return combines income instead.
How are my RRIF payments taxed in the U.S.?
Canada withholds 15 percent on periodic payments; the U.S. taxes them with a credit for that withholding.
Are CPP and OAS taxed in Canada after I move?
No — only in the U.S. under the treaty.
What if only one of us moves?
Canadian splitting isn't available; the U.S. spouse can elect to file jointly with the Canadian spouse.
Official sources
The Canada Revenue Agency lists this among the conditions for splitting pension income: “You and your spouse or common-law partner were residents of Canada on December 31 of the tax year (or on the date of death).” — Canada Revenue Agency, Pension income splitting, https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/pension-income-splitting.html
The IRS explains: “If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident.” — Internal Revenue Service, Publication 519 (2025), U.S. Tax Guide for Aliens, https://www.irs.gov/publications/p519
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle retirement income planning across the move — pension splitting, joint return modeling, and RRIF withholding. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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