If a U.S. resident receives Social Security payments from Canada, how is it taxed in the U.S.?

When a U.S. resident receives Social Security payments from Canada, these payments are categorized under U.S. Social Security for tax purposes. This classification is crucial because the United States has specific tax rules regarding the treatment of Social Security benefits.

For taxation, U.S. residents generally report income and may pay taxes on certain foreign income, including foreign pensions or social security payments. However, U.S. tax laws allow for specific tax treatments of Social Security benefits, potentially making this income taxable depending on overall income levels.

The other options represent different types of income. Interest is typically income earned on investments such as savings accounts or bonds, dividends refer to earnings distributed to shareholders from stocks, and annuities are financial products that provide a stream of income, often related to retirement planning. None of these categories apply to Social Security payments received from another country. Therefore, the classification of such payments as U.S. Social Security provides clarity on how they will be taxed within the context of U.S. tax regulations.