Yes, you can. But it’s important to note an FHSA’s carry forward is different from an RRSP’s. Under an RRSP, your right to carry forward unused contribution room accumulates without limit (until you must convert your RRSP to a RRIF or annuity at the end of the year you turn age 71). Instead, the maximum FHSA contribution room you can carry forward to a subsequent year is $8,000.
Yes. Like an RRSP, you can contribute (within your limits) and claim the deduction in a later year. You may choose this if you expect your income to increase significantly in a future year.
The federal government applies a 1% penalty per month on any contribution amounts over your annual FHSA limit. You can’t deduct overcontributions in the year you make the overcontribution. However, you can deduct it in the following year if you have new unused FHSA contribution room that covers the overcontribution. The 1% penalty ceases when you either withdraw the overcontribution or you earn sufficient contribution room the following year.
For example, let’s assume you open an FHSA and contribute $10,000 in 2023. You have a $2,000 overcontribution for 2023. For 2023, you can deduct $8,000 of that $10,000 contributed. But for the 2023 tax year, you can’t deduct the $2,000 you over-contributed. A 1% penalty tax applies for each month you retain the overcontribution in the plan. On January 1, 2024, you receive additional contribution room of $8,000 for 2024. You can deduct the $2,000 overcontribution in 2024 and contribute and deduct up to $6,000 more during the year. The 1% penalty ceases on January 1, 2024. Note you won’t receive additional contribution room if you’ve surpassed your lifetime limit ($40,000).
Parents can’t contribute directly to their adult child’s FHSA. But they can gift the money to their adult children, who can then use it to contribute to their FHSA. Their adult children then get a tax deduction for those contributions and their qualifying withdrawals will be tax-free. Some financial institutions may require a letter confirming that the parents gifted a certain amount of money and don’t require any repayment from their adult children.
No. An exemption from the attribution rule applies to funds you gift to your spouse to contribute to their FHSA. There’s generally no attribution on funds gifted to an adult child.