Author Topic: Do your owm taxes - Canada  (Read 1276 times)

max9505672

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Do your owm taxes - Canada
« on: February 07, 2017, 10:40:13 AM »
Hi Canadians fellows,

For the first time this year, I'm thinking about doing my own taxes to learn how to do it and save the $50 I use to pay to get them done. I have pretty ''basic'' lifestyle (single, living in apartment, no business), so I think I could efficiently do it.

After some researches, I've found SimpleTax.ca and StudioTax.ca and was thinking about using SimpleTax.ca.

I'd like to know if any have experience with one of those and would like to comment on the quality/ease of use?

Also, what would be the best way to get help if I'd have any questions? Anybody here good at it?

NorthernBlitz

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Re: Do your owm taxes - Canada
« Reply #1 on: February 08, 2017, 02:28:47 PM »
Before we lived in the US we always filed ourselves with U-File. We picked U-File because it was cheaper than other programs like Turbo Tax.

I think that I could usually find it for $20. It's pretty easy, especially if you are a "normal" employee with a T4, some interest income, and RRSP contributions.

Since we moved to the US, I get HR Block software with State (also for $20). The first year we were here, we filed with an accountant, but I bought the software and did it myself to compare the results. They agreed to within $50 (the HR Block calculation was actually a bit more), but the accountant cost >$100. So, now I do my taxes here too. It's pretty much the same since I'm just a W-2 employee (no business / income property).

For less hassle, I try to set up the file for my return in mid-January. Then, whenever I get a receipt I put the number in. In mid-March, I double check everything and send it off. I like that better than collecting all the receipts and doing everything in one shot. I find it less stressful this way.

I am always reluctant to use "free" tax software as it usually means that my data would be saved on some company's servers. It may be silly, but I feel better having it saved on my home computer with less chance of being breached. I think that $20 / year is a small price to pay either way.

max9505672

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Re: Do your owm taxes - Canada
« Reply #2 on: February 08, 2017, 04:24:20 PM »
For less hassle, I try to set up the file for my return in mid-January. Then, whenever I get a receipt I put the number in. In mid-March, I double check everything and send it off. I like that better than collecting all the receipts and doing everything in one shot. I find it less stressful this way.
That's a good advice, thanks!

I think it might be a good idea that, for this year, I do it and also pay someone to do it and then compare results. Then, for upcoming years, I'll know exactly what to do since I expect the same lifestyle for at least 3-5 years.

NorthernBlitz

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Re: Do your owm taxes - Canada
« Reply #3 on: February 09, 2017, 03:46:18 AM »
I think that's a good idea. It takes the stress out of it because you're just "checking" someone else's numbers.

It's a cheap experiment to run.


Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #4 on: February 09, 2017, 01:09:43 PM »
For less hassle, I try to set up the file for my return in mid-January. Then, whenever I get a receipt I put the number in. In mid-March, I double check everything and send it off. I like that better than collecting all the receipts and doing everything in one shot. I find it less stressful this way.
That's a good advice, thanks!

I think it might be a good idea that, for this year, I do it and also pay someone to do it and then compare results. Then, for upcoming years, I'll know exactly what to do since I expect the same lifestyle for at least 3-5 years.
No, run the experiment on last years tax return. There is no need to waste $50, you already have all the data from 2015. SimpleTax is easy to use, I use it and compare the results to Ufile (for free) before sending in. The double check catches any typos I may have made, I have a problem with reversing numbers when I type.

If you cant find last years tax return then you can get it from the CRA site http://www.cra-arc.gc.ca/myaccount/

If you don't have a CRA account, that's where to start. It auto fills simpletax with most of the forms, that's right the accountant can log in, hit autofill and charge $50. Taxes in Canada can be done automatically as of 2015 for simple returns. The CRA account can also be used to send in receipts if they audit you, no need to talk to CRA on the phone.
http://www.cra-arc.gc.ca/esrvc-srvce/tfllmyrtn-eng.html

Automatic tax returns for free; isn't Canada great!

max9505672

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Re: Do your owm taxes - Canada
« Reply #5 on: February 09, 2017, 08:14:06 PM »
For less hassle, I try to set up the file for my return in mid-January. Then, whenever I get a receipt I put the number in. In mid-March, I double check everything and send it off. I like that better than collecting all the receipts and doing everything in one shot. I find it less stressful this way.
That's a good advice, thanks!

I think it might be a good idea that, for this year, I do it and also pay someone to do it and then compare results. Then, for upcoming years, I'll know exactly what to do since I expect the same lifestyle for at least 3-5 years.
No, run the experiment on last years tax return. There is no need to waste $50, you already have all the data from 2015. SimpleTax is easy to use, I use it and compare the results to Ufile (for free) before sending in. The double check catches any typos I may have made, I have a problem with reversing numbers when I type.

If you cant find last years tax return then you can get it from the CRA site http://www.cra-arc.gc.ca/myaccount/

If you don't have a CRA account, that's where to start. It auto fills simpletax with most of the forms, that's right the accountant can log in, hit autofill and charge $50. Taxes in Canada can be done automatically as of 2015 for simple returns. The CRA account can also be used to send in receipts if they audit you, no need to talk to CRA on the phone.
http://www.cra-arc.gc.ca/esrvc-srvce/tfllmyrtn-eng.html

Automatic tax returns for free; isn't Canada great!
That's an even better idea, I'll try this!

My situation has changed though and has been a little more complicated for 2015 than 2016 (full time student in 2015 to full time student AND full time employee in 2016 + RRSP contributions)... But I guess I can still manage this..
« Last Edit: February 09, 2017, 08:35:30 PM by max9505672 »

mrmoolaman

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Re: Do your owm taxes - Canada
« Reply #6 on: February 09, 2017, 11:20:52 PM »
I started using Studio Tax a few years ago when I filed my first tax return ever, and I am constantly trying to convince my friends they can do their own taxes too! Studio Tax is super simple, it literally goes through everything and just asks you yes or no questions about different things, and then gets you to fill in the various values that correspond with boxes on your T4s etc. It is literally foolproof.


Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #7 on: February 10, 2017, 01:32:56 PM »
For less hassle, I try to set up the file for my return in mid-January. Then, whenever I get a receipt I put the number in. In mid-March, I double check everything and send it off. I like that better than collecting all the receipts and doing everything in one shot. I find it less stressful this way.
That's a good advice, thanks!

I think it might be a good idea that, for this year, I do it and also pay someone to do it and then compare results. Then, for upcoming years, I'll know exactly what to do since I expect the same lifestyle for at least 3-5 years.
No, run the experiment on last years tax return. There is no need to waste $50, you already have all the data from 2015. SimpleTax is easy to use, I use it and compare the results to Ufile (for free) before sending in. The double check catches any typos I may have made, I have a problem with reversing numbers when I type.

If you cant find last years tax return then you can get it from the CRA site http://www.cra-arc.gc.ca/myaccount/

If you don't have a CRA account, that's where to start. It auto fills simpletax with most of the forms, that's right the accountant can log in, hit autofill and charge $50. Taxes in Canada can be done automatically as of 2015 for simple returns. The CRA account can also be used to send in receipts if they audit you, no need to talk to CRA on the phone.
http://www.cra-arc.gc.ca/esrvc-srvce/tfllmyrtn-eng.html

Automatic tax returns for free; isn't Canada great!
That's an even better idea, I'll try this!

My situation has changed though and has been a little more complicated for 2015 than 2016 (full time student in 2015 to full time student AND full time employee in 2016 + RRSP contributions)... But I guess I can still manage this..
The other way is to give it a try, if it doesn't work you can always get it done later by someone you pay. That's the mantra of all my DIY projects, I can always pay someone later to do it properly. You can do it, I promise. Filling in RRSP and a T2202A isn't complicated, the only difficulty is making sure you have them before you start. Simpletax walks you through both forms with ease, it will ask for your RRSP room from your Notice of Assessment which is why I suggest the CRA account in case its missing (life happens, people lose them regularly).

I took a 4 hour training course to do taxes as a volunteer...a large part was on client interaction, the taxes part is pretty routine for most folks until you get into small businesses and some other strange stuff (seriously only 4  hours and you can do the majority of peoples taxes). This was meant to assist seniors (some who have never done taxes and are 80), immigrants with language barriers, students with their first filings, low income folks (the volunteering was through the local Food Bank, that's their clientele according to them and not a judgment). I, along with all your other Canadian forum members, will assist with any problems you have.

max9505672

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Re: Do your owm taxes - Canada
« Reply #8 on: February 11, 2017, 01:23:28 PM »
The other way is to give it a try, if it doesn't work you can always get it done later by someone you pay. That's the mantra of all my DIY projects, I can always pay someone later to do it properly. You can do it, I promise. Filling in RRSP and a T2202A isn't complicated, the only difficulty is making sure you have them before you start. Simpletax walks you through both forms with ease, it will ask for your RRSP room from your Notice of Assessment which is why I suggest the CRA account in case its missing (life happens, people lose them regularly).

I took a 4 hour training course to do taxes as a volunteer...a large part was on client interaction, the taxes part is pretty routine for most folks until you get into small businesses and some other strange stuff (seriously only 4  hours and you can do the majority of peoples taxes). This was meant to assist seniors (some who have never done taxes and are 80), immigrants with language barriers, students with their first filings, low income folks (the volunteering was through the local Food Bank, that's their clientele according to them and not a judgment). I, along with all your other Canadian forum members, will assist with any problems you have.
I will give it a shot for sure!

Thanks for your help, and I'll get back here if I need some help.

What's the date limit to fill and send everything?

Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #9 on: February 13, 2017, 08:59:01 AM »
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ll-dts/frms-eng.html

April 30th for most of us. However, RRSP top-ups are due at the end of February, some years you have until March 1. Its a good idea to have your taxes roughed in just after valentines day (romantic, instead of roses I do my wife's taxes, it started when she was my GF) to decide if you will be doing a top up. Some receipts don't get in till late February, I try to file early in March, getting it in before St. Patrick's day is the target. 

However, it takes 2 weeks to get a CRA account, its all just waiting for the password. It takes a few minutes to get the application in and you need a copy of your old tax form, they ask for a random number from the 2015 form for security purposes. That can be done early and makes the whole process easier/quicker. Auto-fill is awesome at doing a large amount of the tax return for you, it works with Simple Tax.

Technically late filing is allowed if the government owes you money. There is no penalty as long as you're owed but you won't receive your refund, GST, or other income based cheques. If you owe them money there's a pretty hefty interest rate on the money owed. You can file taxes or re-file taxes for the past 7 years.

in 2014 I messed up my taxes and forgot to claim a deduction. CRA filled it in for me and sent me a larger refund. Their audit is fair, they will fix mistakes that they catch in your benefit as well as theirs.

max9505672

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Re: Do your owm taxes - Canada
« Reply #10 on: February 13, 2017, 04:34:09 PM »
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ll-dts/frms-eng.html

April 30th for most of us. However, RRSP top-ups are due at the end of February, some years you have until March 1. Its a good idea to have your taxes roughed in just after valentines day (romantic, instead of roses I do my wife's taxes, it started when she was my GF) to decide if you will be doing a top up. Some receipts don't get in till late February, I try to file early in March, getting it in before St. Patrick's day is the target. 

However, it takes 2 weeks to get a CRA account, its all just waiting for the password. It takes a few minutes to get the application in and you need a copy of your old tax form, they ask for a random number from the 2015 form for security purposes. That can be done early and makes the whole process easier/quicker. Auto-fill is awesome at doing a large amount of the tax return for you, it works with Simple Tax.

Technically late filing is allowed if the government owes you money. There is no penalty as long as you're owed but you won't receive your refund, GST, or other income based cheques. If you owe them money there's a pretty hefty interest rate on the money owed. You can file taxes or re-file taxes for the past 7 years.

in 2014 I messed up my taxes and forgot to claim a deduction. CRA filled it in for me and sent me a larger refund. Their audit is fair, they will fix mistakes that they catch in your benefit as well as theirs.
Great thanks! I'm in the process of getting my CRA account.

What about provincial taxes though?

okits

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Re: Do your owm taxes - Canada
« Reply #11 on: February 14, 2017, 02:08:15 AM »
In order to really learn more about our tax system I suggest you get the paper forms, a pencil, and a calculator and do them manually.  Yes, really.  Reading the forms and booklets and doing the calculations is a great way to learn how our tax system works, the whys and hows behind the various credits, exemptions, and treatment of different types of income.  (Why do you need to know this?  So you can craft your own tax-optimization and wealth-building strategies.)

Once you've done this you can plug your information into a tax software program and see if the results differ from what you calculated.  With any differences you can read up on why the software got a different answer and learn from it.

Saving $50/year in accounting fees is nice but knowing how taxes work could save you a lot more than that (and help you when using the tax software).
Camp Mustache Canada... it's a thing now! Queen MonkeyJenga will be honoured with a meatball party there!

Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #12 on: February 14, 2017, 01:19:21 PM »
Provincial taxes are done at the same time as Federal taxes. SimpleTax walks you through both and has explanations at various steps if you're interested. It will ask what province you're from and fill out the forms for you.

At the end you get a complete tax return that looks exactly like the paper forms for your convenience and records. You don't mail them in, you still use e-file to file so you get your refund within a week. Paper copies are pretty outdated, its up to you if you want to print them or just store them electronically. You still need to store receipts...unless you scan them in :)  I submitted an e-receipt to CRA, they accepted it as proof and were fine with it. I think they prefer it that way over paper now. I was told they use to have some pretty massive warehouses in Winnipeg storing all this data, digitizing is saving them a fortune.

For answers on tax questions and strategies, this is the best site I've seen.
http://www.taxtips.ca/

max9505672

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Re: Do your owm taxes - Canada
« Reply #13 on: February 14, 2017, 05:01:59 PM »
Provincial taxes are done at the same time as Federal taxes. SimpleTax walks you through both and has explanations at various steps if you're interested. It will ask what province you're from and fill out the forms for you.

At the end you get a complete tax return that looks exactly like the paper forms for your convenience and records. You don't mail them in, you still use e-file to file so you get your refund within a week. Paper copies are pretty outdated, its up to you if you want to print them or just store them electronically. You still need to store receipts...unless you scan them in :)  I submitted an e-receipt to CRA, they accepted it as proof and were fine with it. I think they prefer it that way over paper now. I was told they use to have some pretty massive warehouses in Winnipeg storing all this data, digitizing is saving them a fortune.

For answers on tax questions and strategies, this is the best site I've seen.
http://www.taxtips.ca/
I will definitely give it a try! Thanks for your answers, very helpful.

max9505672

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Re: Do your owm taxes - Canada
« Reply #14 on: February 14, 2017, 05:03:10 PM »
In order to really learn more about our tax system I suggest you get the paper forms, a pencil, and a calculator and do them manually.  Yes, really.  Reading the forms and booklets and doing the calculations is a great way to learn how our tax system works, the whys and hows behind the various credits, exemptions, and treatment of different types of income.  (Why do you need to know this?  So you can craft your own tax-optimization and wealth-building strategies.)

Once you've done this you can plug your information into a tax software program and see if the results differ from what you calculated.  With any differences you can read up on why the software got a different answer and learn from it.

Saving $50/year in accounting fees is nice but knowing how taxes work could save you a lot more than that (and help you when using the tax software).
Good idea!

Kimera757

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Re: Do your owm taxes - Canada
« Reply #15 on: February 14, 2017, 08:55:24 PM »
I am always reluctant to use "free" tax software as it usually means that my data would be saved on some company's servers. It may be silly, but I feel better having it saved on my home computer with less chance of being breached. I think that $20 / year is a small price to pay either way.
That's not always true. StudioTax saves your info on your computer, then sends it electronically. If you have to download the program, it's usually pretty safe, you only need to worry about intercepting. (And you can delete the date from your computer.) I have registered for My Account, so in a way my tax info is in the cloud anyway.

RetiredAt63

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Re: Do your owm taxes - Canada
« Reply #16 on: February 18, 2017, 08:09:06 AM »

Great thanks! I'm in the process of getting my CRA account.

What about provincial taxes though?

If you are in Quebec you file separately for provincial tax, and you need the Quebec federal tax forms.  Everywhere else the two are done together.  The tax form asks for province/territory of residence.

I did my taxes on paper for years - that was all there was.  Doing them on paper once, to see how it works, is a good idea.  You can then redo it with software and see how the software handles things. The end results should be the same, of course.  ;-)

My taxes are more complicated than yours and I have always done them myself - you can do this!


Canadian Ben

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Re: Do your owm taxes - Canada
« Reply #17 on: February 18, 2017, 08:39:58 AM »
Simple Tax now can do Quebec and Federal together.

For people with simple taxes (just a T-4, possibly and R-1 too) it takes less than 10minutes to fill out.

Then you go through the "other optimization" in order to see what types of rebates exist and you can add them in.

The transit rebate is a big one that people forget, but simpletax lists every deduction you can add.

Oh, and it's free!

max9505672

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Re: Do your owm taxes - Canada
« Reply #18 on: March 06, 2017, 07:03:16 AM »
What about someone who worked in 2 different Canadian province? I worked in BC and QC and I have 2 different T4 (1 for each province).

Can SimpleTax manage this?

Canadian Ben

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Re: Do your owm taxes - Canada
« Reply #19 on: March 06, 2017, 08:26:42 AM »
It should, when I filled mine out it asked me if I worked/spent time in another province. It'll ask all sorts of questions and it'll fill out both. Since it can do Quebec and Ontario on the same form, there's no reason it wouldn't be able to do both together.

Kaspian

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Re: Do your owm taxes - Canada
« Reply #20 on: March 06, 2017, 09:57:54 AM »
I've used UFile for years.  They hiked the price of software this year from $22 to $24 so next year I'm going to consider using their online version instead--which would save me about $6. 

This years' was pretty great though--it imported all my T slips (and other things) directly from the CRA.  I only had to verify the numbers and add an extra two slips before filing. 
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max9505672

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Re: Do your owm taxes - Canada
« Reply #21 on: March 06, 2017, 11:33:42 AM »
It should, when I filled mine out it asked me if I worked/spent time in another province. It'll ask all sorts of questions and it'll fill out both. Since it can do Quebec and Ontario on the same form, there's no reason it wouldn't be able to do both together.
Ok thanks, I'll try that

max9505672

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Re: Do your owm taxes - Canada
« Reply #22 on: March 06, 2017, 12:27:58 PM »
Anybody know how to apply the difference between RRSP contribution and RRSP deduction?

For example, in 2016, I put 10K$ in my RRSP, but only want to deduct 5K$ for taxes reasons.

In the ''Contribution to a RRSP and deduction'', all I see are contributions options :

-Your RRSP, from March 1st to December 31 2016
-Your RRSP, from Jan. 1st to March 1st 2017
-Your PRPP, from March 1st to December 31 2016
-Your PRPP, from Jan. 1st to March 1st 2017

Any help on the difference between both?

Cookie78

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Re: Do your owm taxes - Canada
« Reply #23 on: March 06, 2017, 01:13:34 PM »
Wow, so far simple tax has been very easy! I've been meaning to switch over to it for a year or two. Thanks for the nudge!

Canadian Ben

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Re: Do your owm taxes - Canada
« Reply #24 on: March 07, 2017, 05:56:16 AM »
Anybody know how to apply the difference between RRSP contribution and RRSP deduction?

For example, in 2016, I put 10K$ in my RRSP, but only want to deduct 5K$ for taxes reasons.

In the ''Contribution to a RRSP and deduction'', all I see are contributions options :

-Your RRSP, from March 1st to December 31 2016
-Your RRSP, from Jan. 1st to March 1st 2017
-Your PRPP, from March 1st to December 31 2016
-Your PRPP, from Jan. 1st to March 1st 2017

Any help on the difference between both?

Send an email to the Help contact of the website.

Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #25 on: March 07, 2017, 04:40:16 PM »
Anybody know how to apply the difference between RRSP contribution and RRSP deduction?

For example, in 2016, I put 10K$ in my RRSP, but only want to deduct 5K$ for taxes reasons.

In the ''Contribution to a RRSP and deduction'', all I see are contributions options :

-Your RRSP, from March 1st to December 31 2016
-Your RRSP, from Jan. 1st to March 1st 2017
-Your PRPP, from March 1st to December 31 2016
-Your PRPP, from Jan. 1st to March 1st 2017

Any help on the difference between both?
Input all the numbers into simple tax, this is just book keeping. Next year you will have unclaimed credits. 

Then below it you'll see "Optimized Credit and Deductions Table" that's a link to "Summary" which contains the dropdown "Optimized Credits and Deductions". In there you'll see your name (your spouse if applicable) and all the credits you can transfer (charity etc.) as well as RRSP. Click on RRSP and enter a number less than the maximum listed to the right.

max9505672

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Re: Do your owm taxes - Canada
« Reply #26 on: March 07, 2017, 06:31:57 PM »
Anybody know how to apply the difference between RRSP contribution and RRSP deduction?

For example, in 2016, I put 10K$ in my RRSP, but only want to deduct 5K$ for taxes reasons.

In the ''Contribution to a RRSP and deduction'', all I see are contributions options :

-Your RRSP, from March 1st to December 31 2016
-Your RRSP, from Jan. 1st to March 1st 2017
-Your PRPP, from March 1st to December 31 2016
-Your PRPP, from Jan. 1st to March 1st 2017

Any help on the difference between both?
Input all the numbers into simple tax, this is just book keeping. Next year you will have unclaimed credits. 

Then below it you'll see "Optimized Credit and Deductions Table" that's a link to "Summary" which contains the dropdown "Optimized Credits and Deductions". In there you'll see your name (your spouse if applicable) and all the credits you can transfer (charity etc.) as well as RRSP. Click on RRSP and enter a number less than the maximum listed to the right.
Thanks man, that's exactly what I needed :)

Still waiting for some PRPP documents and I should be good to go!

Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #27 on: March 07, 2017, 06:59:57 PM »
Hopefully you don't make a habit of carrying over credits. In the spot where it says maximum allowed contribution you can't exceed it; they allow a grace of $2000 over contributions but after that they start giving penalties. You have to frequent these forums to find it out, regular people don't realize you can max out the RRSP contributions.

Congrats on having to wait for forms, that's a badge of honour.

max9505672

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Re: Do your owm taxes - Canada
« Reply #28 on: March 07, 2017, 09:22:07 PM »
Hopefully you don't make a habit of carrying over credits. In the spot where it says maximum allowed contribution you can't exceed it; they allow a grace of $2000 over contributions but after that they start giving penalties. You have to frequent these forums to find it out, regular people don't realize you can max out the RRSP contributions.
No don't worry, I keep a register of every RRSP contribution I make. I am close but still not at max RRSP contribution :)

Goldielocks

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Re: Do your owm taxes - Canada
« Reply #29 on: March 09, 2017, 04:48:25 PM »
Hopefully you don't make a habit of carrying over credits. In the spot where it says maximum allowed contribution you can't exceed it; they allow a grace of $2000 over contributions but after that they start giving penalties. You have to frequent these forums to find it out, regular people don't realize you can max out the RRSP contributions.

Congrats on having to wait for forms, that's a badge of honour.
Carrying RRSP credits is not quite the same as an over contribution.

Eg.
You only made $40 k this year because of an awesome 6 month sabbatical. But you had room for $10 k and put in $10 k.

Next year you will make $100 k. With much higher marginal tax rate.

You can choose to not claim all 10k on this year's taxes but wait a year. Meanwhile your money earns tax deferred. But you don't get the taxes back yet.

Next year you claim he $10 k plus any new contributions and get a lot more money back.

The whol time, you at at or under your limit, so no penalties for being over by more than $2 k.

Prairie Stash

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Re: Do your owm taxes - Canada
« Reply #30 on: March 10, 2017, 08:17:43 AM »
Hopefully you don't make a habit of carrying over credits. In the spot where it says maximum allowed contribution you can't exceed it; they allow a grace of $2000 over contributions but after that they start giving penalties. You have to frequent these forums to find it out, regular people don't realize you can max out the RRSP contributions.

Congrats on having to wait for forms, that's a badge of honour.
Carrying RRSP credits is not quite the same as an over contribution.

Eg.
You only made $40 k this year because of an awesome 6 month sabbatical. But you had room for $10 k and put in $10 k.

Next year you will make $100 k. With much higher marginal tax rate.

You can choose to not claim all 10k on this year's taxes but wait a year. Meanwhile your money earns tax deferred. But you don't get the taxes back yet.

Next year you claim he $10 k plus any new contributions and get a lot more money back.

The whol time, you at at or under your limit, so no penalties for being over by more than $2 k.
Its tax deferred, that's the problem. You are committing to paying future taxes and getting nothing now in return. The better strategy is to dump it into TFSA, you get nothing now and pay nothing later. In some cases a regular investment account will beat out the RRSP deferral strategy, Dividend and capital gain taxes are much less than the tax rate on RRSP withdrawals. 

I mentioned the over contribution only as a warning, not everyone realizes that they can't dump unlimited money into the RRSP accounts now and just claim the credits later. If you exceed the contribution limit by more than $2000, regardless of claiming the credits, you will pay a penalty to CRA. You are required to fill out CRA form T1-OVP, RRSP Excess contribution

In any event if the TFSA isn't maxed an RRSP credit means you bought yourself extra future taxes.

Goldielocks

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Re: Do your owm taxes - Canada
« Reply #31 on: March 10, 2017, 11:26:04 PM »
Hopefully you don't make a habit of carrying over credits. In the spot where it says maximum allowed contribution you can't exceed it; they allow a grace of $2000 over contributions but after that they start giving penalties. You have to frequent these forums to find it out, regular people don't realize you can max out the RRSP contributions.

Congrats on having to wait for forms, that's a badge of honour.
Carrying RRSP credits is not quite the same as an over contribution.

Eg.
You only made $40 k this year because of an awesome 6 month sabbatical. But you had room for $10 k and put in $10 k.

Next year you will make $100 k. With much higher marginal tax rate.

You can choose to not claim all 10k on this year's taxes but wait a year. Meanwhile your money earns tax deferred. But you don't get the taxes back yet.

Next year you claim he $10 k plus any new contributions and get a lot more money back.

The whol time, you at at or under your limit, so no penalties for being over by more than $2 k.
Its tax deferred, that's the problem. You are committing to paying future taxes and getting nothing now in return. The better strategy is to dump it into TFSA, you get nothing now and pay nothing later. In some cases a regular investment account will beat out the RRSP deferral strategy, Dividend and capital gain taxes are much less than the tax rate on RRSP withdrawals. 

I mentioned the over contribution only as a warning, not everyone realizes that they can't dump unlimited money into the RRSP accounts now and just claim the credits later. If you exceed the contribution limit by more than $2000, regardless of claiming the credits, you will pay a penalty to CRA. You are required to fill out CRA form T1-OVP, RRSP Excess contribution

In any event if the TFSA isn't maxed an RRSP credit means you bought yourself extra future taxes.
I did not suggest that anything was better in one scenario than another. Only showing that the maximum @$2k over contribution is utterly different from deferring claiming your tax deduction until a high tax year.

  Not claiming RRSP deductions until a future highly paid year can be a great advantage in the right specific situation.... which includes maxing out your TFSA first.