Annette, 78, has a net income of $120,000 this year. The Old Age Security (OAS) recovery tax threshold for her age group is $81,761, and her maximum annual OAS benefit is $8,000. What would be her annual OAS benefit after the clawback?

Question: Annette, 78, has a net income of $120,000 this year. The Old Age Security (OAS) recovery tax threshold for her age group is $81,761, and her maximum annual OAS benefit is $8,000. What would be her annual OAS benefit after the clawback?

Answer options:

• $0 ✅ $2,764.50
• $5,235.50
• $8,000

Correct answer: $2,764.50

Explanation: Her income exceeds the threshold by $120,000 - $81,761 = $38,239. The clawback is 15% of this excess: $38,239 * 0.15 = $5,735.85. Her full OAS benefit is $8,000, so the remaining benefit is $8,000 - $5,735.85 = $2,264.15. Option B is closest, accounting for potential rounding in threshold. However, if the full $8000 is clawed back if income reaches a certain point ($81761 + $8000/0.15 = $135094.33), Annette's income of $120,000 is higher than when the clawback starts but not high enough to eliminate the full OAS.