How to Find Out How Much CPP You Will Owe

Canadian dollars were almost equal in value to U.S. dollars in May 2011.

If you are self-employed in Canada, you must contribute to the Canada Pension Plan (CPP) even if you are a U.S. citizen. You will have to pay your contribution when your fill out your Canadian income tax return. Generally, as of May 2011, the first $3,500 of your income is exempt from CCP taxes, and the rest of your income up to $43,700 is subject to a 9.9 percent tax. All of these figures are in Canadian dollars.

Instructions

1. Calculate your net self-employment earnings in Canada for the tax year. Report the amounts on line 122 and lines 135 to 143 of Schedule 1 of the Canadian T1 federal tax return (see Resources).

2. Add the amount of any wages you will make in Canada or from a Canadian employer that you wish to voluntarily pay CPP contributions on. Only include wages from an employer that does not already deduct CCP contributions. Find a list of eligible wages of Canada Revenue Agency Form CPT20, "Election To Pay Canada Pension Plan Contributions" (see Resources).

3. Add any wages you will make that have CCP contributions deducted. You will be able to find these amounts in Box 26 or Box 14 of your T1 slips that you receive at the end of the year.

4. Subtract the basic exemption of $3,500 from your total. If your result is zero or less, you will not owe CCP contributions.

5. Multiply the total from the previous step by .099. The result represents the total amount of CCP contributions you must pay for the years. (As of May 2011, the maximum amount you can owe is $4,326.)

6. Find the amount of CCP contributions that will already be paid on your behalf. This will be twice the amount off CCP contributions taken from your pay, because your employer will match your contribution.

7. Subtract the amount of CCP contributions that will already be paid from the total amount you will owe. The result will be the amount of CCP contributions you will have to pay at income tax time.

Tips & Warnings

• If you pay into both the Canada Pension Plan and the U.S. Social Security system, you can use your contributions to both systems when calculating your eligibility for benefits at retirement.

References

• Canada Revenue Agency: Form T1-210, "CPP Contributions on Self-Employment and Other Earnings"

Resources

• SSA.gov: Totalization Agreement with Canada
• Canada Revenue Agency: Form CPT20, "Election To Pay Canada Pension Plan Contributions"
• Canada Revenue Agency: Form T1, Schedule 1