Cardinal Point Wealth Management Reveals Key Tax Strategies for Cross Border Couples Claiming Social Security

United States, 24th Nov 2025 – Cardinal Point Wealth Management has issued an advisory outlining 2025 claiming strategies for married couples receiving U.S. Social Security, with special emphasis on how benefits are taxed in both the United States and Canada. For cross-border families—particularly U.S. citizens living in Canada—understanding the tax implications for both countries is crucial for maximizing after-tax retirement income.

While Canadians are accustomed to the Canada Pension Plan (CPP) and Old Age Security (OAS), many cross-border couples also qualify for U.S. Social Security through personal work history or a spouse’s record. But choosing when and how to claim these benefits is vital, because that affects lifetime income, survivor protection, and tax exposure.

U.S. Taxation of Social Security in 2025:

• Single filers: below $25,000 – no tax; $25,000–$34,000 – up to 50% taxable; above $34,000 – up to 85% taxable.
• Married filing jointly: below $32,000 – no tax; $32,000–$44,000 – up to 50% taxable; above $44,000 – up to 85% taxable.

Because these limits aren’t indexed to inflation, most dual-income households now pay federal tax on 85% of benefits. Some states also tax Social Security to varying degrees.

New One Big Beautiful Bill Act (OBBBA) Seniors Deduction:

Under the OBBBA, people aged 65 and older can claim a deduction of $6,000 each ($12,000 per couple) for 2025–2028. It phases out between $150,000–$250,000 of modified adjusted gross income for joint filers. Unless extended, it expires after 2028.

Canadian Taxation of U.S. Social Security:

Only 85% of U.S. Social Security benefits are taxable in Canada, with 15% automatically exempt. No U.S. withholding applies, so benefits are taxed solely in Canada at marginal rates.

The Canada-U.S. tax treaty often makes U.S. Social Security more favorable than CPP or OAS at higher income levels, though the CRA may request documentation supporting the 15% exemption on an annual basis.

Claiming Strategies for Couples:

When both spouses have comparable work histories, each usually qualifies for benefits independently.

• Staggered Claiming: One spouse claims at full retirement age (67), the other delays to 70, balancing income and maximizing survivor protection.
• Both Delay: Best for high-income couples who can use investments to bridge the gap, increasing lifetime and survivor benefits.
• Typically, the higher earner delays to 70, while the lower earner claims earlier to add household income without affecting survivor benefits.

When one spouse has limited U.S. earnings, spousal and survivor benefits are key. A spousal benefit equals up to 50% of the higher earner’s benefit. Survivor benefits equal 100% if claimed at full retirement age.

Cross-Border and Treaty Considerations

Canadians with at least 40 U.S. work credits (10 years) qualify for benefits directly. The Totalization Agreement allows those with fewer credits to combine CPP contributions to meet eligibility, although the amount is based only on U.S. earnings.

The 2025 repeal of the Windfall Elimination Provision (WEP) allows Canadians to collect both full CPP and U.S. Social Security without offset. For U.S. citizens in Canada, Social Security is taxed only in Canada under the treaty, but overall income planning must consider the OAS clawback and provincial taxes.

Tax and Income Planning Opportunities

• Income Smoothing: Withdraw from RRSPs, RRIFs, or IRAs before claiming Social Security to reduce future taxable income and Medicare surcharges.
• Roth Conversions: Converting before claiming benefits may reduce later tax exposure.
• Spousal Timing: Coordinating claim ages helps manage both cash flow and survivor security.
• Residency: Retiring in lower-tax provinces can materially improve after-tax income.

Key Takeaways

• Up to 85% of Social Security is taxable in the U.S.; Canadians include 85% under treaty rules.
• The OBBBA deduction provides short-term relief for retirees 65+.
• Staggered claiming often provides the best mix of income and survivor protection.
• Delaying to 70 maximizes benefits but requires pre-claim cash flow planning.
• WEP repeal improves benefits for Canadians with U.S. work histories.
• Coordination between both tax systems is essential to optimize after-tax income.

What This Means for You

For Canadians and U.S. citizens planning cross-border retirement, Social Security is a key component of a long-term income strategy. Tax rules, claiming ages, and treaty provisions can affect how much retirees keep after tax. Understanding how the Canada–U.S. Tax Treaty, OBBBA deduction, and WEP repeal interact is critical to avoid surprises and safeguard survivor income. Effective cross-border planning ensures retirees optimize benefits and remain compliant on both sides of the border.

About Cardinal Point Wealth Management

Cardinal Point Wealth Management provides integrated financial, tax, and estate planning services for clients with assets in Canada and the United States. The firm specializes in cross-border wealth management, cross-border tax planning, and cross-border estate planning, serving as a trusted Canada–U.S. expat advisor for individuals and families managing complex, multi-jurisdictional retirement and taxation issues. Its multidisciplinary team assists clients with intricate cross-border compliance, helping ensure financial transitions are managed accurately and efficiently.

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.

Company Details

Organization: Cardinal Point Wealth Management, ULC

Contact Person: Kris Rossignoli, Senior Private Wealth Manager

Website: http://www.cardinalpointwealth.com/

Email: Send Email

Country: United States

Release Id: 24112537672