is OAS clawback tax?

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Diskdoctor
Posts: 73
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

is OAS clawback tax?

Post by Diskdoctor » Wed Apr 10, 2019 8:50 pm

Just going over my father-in-law's taxes and would like to confirm I am treating this amount properly.

Is the social benefits repayment (i.e. OAS clawback; T1 lines 235/422) a tax? I want to make sure that including it as foreign tax when completing U.S. form 1116 is correct. At first glance I wasn't sure but this page:
https://www.canada.ca/en/revenue-agency ... yment.html
from the CRA website refers to it as a "recovery tax" so that seems to be clear.

nelsona
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Re: is OAS clawback tax?

Post by nelsona » Thu Apr 11, 2019 9:44 am

I would agree.
You could also simply take it as a reduction in income as well.

But, can I ask in which context you would be "needing" this foreign tax?

Since he is a Cdn resident (otherwise he would probably not be filing a Cdn return, and certainly would not be subject to clawback), the income is not taxable in US, so the "extra" tax you would be claiming would be going towards his other Gen Limit income (pensions etc) , which I'm sure would already have enough Cdn tax to cover any US claim.

Just curious
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Diskdoctor
Posts: 73
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

Re: is OAS clawback tax?

Post by Diskdoctor » Thu Apr 11, 2019 2:25 pm

Thanks for the confirmation!

The 'need' for the foreign tax credit is due to income splitting. He splits pension income with his wife for Canadian taxes. She is not a US citizen so doesn't file US taxes. His full pension amount is taxable in the US so he needs as much foreign tax credit from the 1116 as possible while at the same time wanting to minimize Canadian taxes via the income splitting.

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

Re: is OAS clawback tax?

Post by nelsona » Thu Apr 11, 2019 2:50 pm

So, even with pension splitting he is subject to clawback?
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Diskdoctor
Posts: 73
Joined: Wed Apr 21, 2010 9:46 am
Location: Winnipeg

Re: is OAS clawback tax?

Post by Diskdoctor » Thu Apr 11, 2019 3:40 pm

Yeah, even with the splitting. He's been pulling some additional money out of the retirement funds the last couple of years.

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