Closing US Health savings account (HSA)

[nelsona]

Non-medical withdrawals, even if over 65, will be considered income in both US and Canada (include on pension line). You can use the US tax and penalties as foreign tax credit.
Roth withdrawals are included on the pension line as well, and then the non-taxable portion would be deducted on line 25600, as treaty excluded income.

[skarme312]

Just wanted to provide some information for others viewing this post. I closed my HSA and claimed the tax paid (including the 20% additional tax) as foreign tax credit on my canadian return. My return was flagged, and CRA requested more info regarding the foreign tax. The claim was then approved by the CRA after I provided by IRS transcript along with my US tax return filing. Hope this helps others out and thanks to nelsona for answering my questions.

[brianbbc]

For a Roth distribution , assume one time election was accepted by cra , and no irs penalty or tax assessed, how is the Roth distribution reported to the cra? I’m wondering if that is considered world income to be included in oas clawback. My thought is the Roth distribution shouldn’t be because it is not taxable income.

[nelsona]

It is to be reported as income (on the other pension line -11500, see the tax guide for line 11500), and then deducted on the treaty line (25600). Thus it is included in the income used to determine OAS clawback. Same for Social security benefits: the entire amount is included on 11500 and the 15% not taxable is reported on 25600.