Tax Treatment of US Healthcare Savings Accounts (HSA)
Moderator: Mark T Serbinski CA CPA
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Tax Treatment of US Healthcare Savings Accounts (HSA)
I can't seem to find a clear and recent answer about Canadian tax treatment of US HSA (healthcare savings accounts). Should one try to spend down this money before returning / moving-to Canada, or can it grow tax-free much like an IRA? I've got a significant amount saved in my HSA.
Anecdotal information seems to imply it is okay to leave it as-is, but I've also got concerns about cross border compliance issues with the HSA holder (the same way many US brokerages will freeze / force liquidation of accounts if investor moves overseas).
Thoughts or advice?
Anecdotal information seems to imply it is okay to leave it as-is, but I've also got concerns about cross border compliance issues with the HSA holder (the same way many US brokerages will freeze / force liquidation of accounts if investor moves overseas).
Thoughts or advice?
You can keep the HSA, and use it like you were while in US, on eligible expenses. If you use it on ineligible expenses, the withdrawals will be taxable in Canada and US. Of course, you may not have many medical expenses in Canada, but you can use the funds for any that you do incur. They are protected by the treaty, as "benefit" accounts.
As to keeping your funds with a praticular firm, that should be a concern for ALL you US accounts (401(K), IRA, Roth, etc). You need to get CLEAR indication from the sccount managers that you can keep them after leaving, or find another firm BEFORE you leave US.
As to keeping your funds with a praticular firm, that should be a concern for ALL you US accounts (401(K), IRA, Roth, etc). You need to get CLEAR indication from the sccount managers that you can keep them after leaving, or find another firm BEFORE you leave US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
Hey Nelson, i have a follow up question. I am working in the United States but am still a tax resident of Canada. If I contribute to an HSA, is that money tax deductible in Canada for the year in which it is earned? If so, do i claim it as a medical expense?
Thanks
Thanks
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
It is deductible, but simply by not including it your wage income (just as it is not included in US). When you incur medical expenses which you pay with HSA, those expenses can be claimed in Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
So if i read that right, any income placed into a HSA will not show up on my W2?
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
It will not show up in your wage box ; it will be a coded amount on your W-2, like your 401(k) etc. CRA has never said to add that amount back into your wages (unlike 401(k)).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
Thanks for the follow-up. Much appreciated
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
Good evening Nelsona. I paid into an HSA for 2019 but it does not appear on my W2 in any of the boxes. Can I simply print out from the company I work for the amount I paid into the HSA for 2019 or will I need a tax document for filing purposes?
Thanks in advance for any information from anyone in the group..
Thanks in advance for any information from anyone in the group..
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
If you paid thru your payroll, it MUST appear on your w-2 (Box 12 code w). If you paid on your own, you simply enter it on 1040, and fill form 8889. The form from your HSA will be issued long after tax time
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
nelsona wrote:
> If you paid thru your payroll, it MUST appear on your w-2 (Box 12 code w).
> If you paid on your own, you simply enter it on 1040, and fill form 8889.
> The form from your HSA will be issued long after tax time
Doesn't appear on w-2 (Box 12 code w) but I did pay into HSA (deduction through my pay checks). I used the amounts so I assume I can still use the amount and if audited, provide the HSA statement?
Thanks again for the response nelsona - truly appreciate your expertise and your opinions
> If you paid thru your payroll, it MUST appear on your w-2 (Box 12 code w).
> If you paid on your own, you simply enter it on 1040, and fill form 8889.
> The form from your HSA will be issued long after tax time
Doesn't appear on w-2 (Box 12 code w) but I did pay into HSA (deduction through my pay checks). I used the amounts so I assume I can still use the amount and if audited, provide the HSA statement?
Thanks again for the response nelsona - truly appreciate your expertise and your opinions
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
You might want to get your employer to issue a corrected W-2.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
Just adding on to the discussion, can a commuter working in the states and living on Canadian side contribute to a HSA?
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
sajc wrote:
> Just adding on to the discussion, can a commuter working in the states and
> living on Canadian side contribute to a HSA?
I ask this because I read that since in Canada, there is govt assisted medicare, one cannot contribute to a HSA.
> Just adding on to the discussion, can a commuter working in the states and
> living on Canadian side contribute to a HSA?
I ask this because I read that since in Canada, there is govt assisted medicare, one cannot contribute to a HSA.
Re: Tax Treatment of US Healthcare Savings Accounts (HSA)
That is correct. The Cdn healthcare plan falls under the definition of a plan which prevents one from contributing to an HSA. It is ok if you already have a plan, you can use it, but not contribute to it.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing