HSA

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: HSA

Post by nelsona »

OK that is pretty big.
Done correctly, you may not owe any tax in US if your spread it out. But it will take a big hit in canada and could impact OAS clawback. Might want to consider taking it out before drawing OAS. The US tax and penalty might be the same as your Cdn tax rate, and then you don't have to worry about clawback.

For inheritance purposes it is very important to name a beneficiary of each account with the custodian, and it should be the other spouse (if alive). Tip. Even if you draw down an HSA to zero, do NOT close it, because once it is closed you cannot open a new one (or inherit one) if you are not actively in a high-deductible US health plan. If it cannot transfer to the spouse it become part of your estate, and is collapsed (which would be a Cdn taxable event).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
brianbbc
Posts: 87
Joined: Fri Apr 25, 2014 9:17 pm

Re: HSA

Post by brianbbc »

Yeah I thought about that inheritance, that’s why I wanted to draw down the hsa, the beneficiary routes are not as friendly as the IRA and Roth IRAs I have (irs gives more options) Good thing to know about not closing it.

Oas is kinda new to me, still not collecting it. My understanding is 10 years after age 18 or 20 years combined if out of the country for a period to qualify. I don’t think the amount is based on earned income in Canada like ccp. I only worked a few years in Canada so that monthly ccp amount is going to be small regardless. Am I correct in thinking he clawback starts at around $79k net at present and it’s individual, not spousal consideration?

My other concern is also drawing down the ira as I’m eligible for a healthy monthly social security payment. That’ll be subject to clawback if I go over the threshold. But what about Roth distributions, will they be considered part of net income?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: HSA

Post by nelsona »

Too many subjects here.

You are eligible for lifetime OAS wherever you live, if you breath in Canada for 20 years. 10 year if you also worked for 10 years in USA. The maximum is prorated for the number of years after 18 you lived in Canada.

Why would you be subject to SS "clawback"?? There is no such thing. Your SS is not taxed in US, only canada and not subject to clawback. Only OAS is subject to clawback. There is WEP on your SS because you have cpp, but that is a straight reduction in SS by the US, unless you worked in US for 30 years.


Roth income in canada, although not taxable, does count toward your net income for OAS clawback

I trust you have filed the paperwork with CRA to make your Roth non-taxable?

And while we are at it, IRAs, or Roth IRAs (if taxable) are not splittable in Canada, only pensions, 401(k), SS are splittable.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
brianbbc
Posts: 87
Joined: Fri Apr 25, 2014 9:17 pm

Re: HSA

Post by brianbbc »

Please excuse me for the diversity of last reply. I did perform the election to the cra properly when I first came back. I didn’t think their was a SS clawback but was wondering if my SS counted as world income in Canada, and that may trigger the oas clawback.
I was surprised that you mentioned SS is not taxed in the USA, only in Canada, and apparently at 85%. I worked there for 23 years. If I’m not taxed by the irs for SS, do I still need to perform some kind of filling on a 1040nr or just do the filing with the cra? The irs must want some kind of recording. You did mention the WEP of my SS because of my CCP, so I’m assuming I need to file 1040nr to report that CCP amount to be deducted from my SS. I researched SSA.gov and they have a calculator for WEP for non-covered pension amounts (ccp- a pension that never had withheld SS taxes). I’m guess this is what you’re referring to?
brianbbc
Posts: 87
Joined: Fri Apr 25, 2014 9:17 pm

Re: HSA

Post by brianbbc »

As a follow up, I found at ssa.gov that “Your foreign pension will not cause WEP to apply to your U.S. social security benefit”
brianbbc
Posts: 87
Joined: Fri Apr 25, 2014 9:17 pm

Re: HSA

Post by brianbbc »

Sorry, Ignore the very last post, it doesn’t apply to me
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