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Canadian tax tips

Taxes

Children Fitness Credit Helps Kids Stay Active

September usually means parents are signing their kids up to play sports, take lessons or keep active. The $500 Children’s Fitness Credit is meant to give parents a little credit for registering.

Once the kids start back at school, it seems like everything re-starts. Across the country, parents are already standing on the sidelines of soccer games, keeping their fingers warm on a cup of coffee watching hockey tryouts or driving their children to basketball games. It is back into the regular routines.

September 23, 2011

Taxes

Make The Most Of Your 2010 Tax Return Before The End Of The Year

Review your stock portfolio. The markets did gain some ground in 2010 but many people are still facing capital losses on their investments from previous years. It is a smart strategy to review your portfolio before the year end to see if you can find a tax advantage in taking a loss or cashing in a gain. Capital losses can be carried back three years or carried forward indefinitely.
Taxable income: If you have cashed in some of your RRSP, sold an investment property or received a lump sum pay out from an employer, you may want to do a rough calculation of your taxable income. All of these elements can impact your tax payable and you may be facing a tax bill. There may be ways to reduce your bill but you will be limited after December 31.
EI Benefits: EI claims may have gone down in 2010 but taxpayers collecting EI may want to review their tax obligations before the end of the year. In most cases, the tax withheld at source from EI benefits is usually insufficient to cover their actual tax liability when the benefits are added to other income earned during the year.

Pooling medical expenses: If you have an expensive trip to the dentist coming up, you may want to consult a calendar. Medical expenses can be claimed in any 12-month period ending in 2010 so it could be beneficial to try to fit known medical expenses into the same 12-month period in order to maximize your claim. You don’t actually have to go to the dentist but if you have an outstanding amount, try to pay the bill by the end of the year. Remember, medical expenses are reduced by a percentage of your income. So the greater their dollar value, the likelier it will be that you can make a claim.

Home Renovations: You may have receipts from early 2010 that are eligible for the Home Renovation Tax Credit but you cannot claim them on your 2010 tax return. The HRTC was only available to be claimed in 2009. If you have eligible receipts, you will need to file an adjustment to your 2009 tax return.

Get organized: Trying to find all your slips the day before the tax deadline is never a good thing. If you haven’t already, start an envelope or folder to hold all your tax slips and receipts. You can still procrastinate until the last day but at least all your slips will be together.

Save for Higher Education: With tuition costs rising, many parents and grandparents want to take advantage of the government’s Canada Education Savings Grant (CESG). You must make a contribution to your child’s Registered Education Savings Plan (RESP) before December 31. The lifetime RESP contribution limit is $50,000 with no annual contribution limit. CESG matching contribution per year is up to $500, with additional supplements for lower-and middle-income taxpayers.

Making a difference: If you want to claim a charitable donation on your 2010 tax return, you have to make it before December 31. If you have already made more than $200 in donations in 2010 it will also be worth a 29 percent federal credit instead of the 15 percent for donations under $200. The good news is that now you can donate publicly-listed securities to registered charities or private foundations without being subject to capital gain taxes.

Moving to start a job in a different province? Check the provincial tax rates before deciding the moving day. You are subject to provincial tax in the province where you reside on December 31. So if there is a substantial difference in the tax rates, you may want to either speed up or defer the move.

October 22, 2010

Taxes

Five RRSP Tax Tips For Your Family

While reading 101 Tax Secrets For Canadians I stumbled across some really helpful tax tips that could save your family money.

1. Have your children file a tax return as soon as they start to earn an income, even if they aren’t earning a lot. By doing so, they will start to accumulate RRSP contribution room which will result in future tax savings. This is also a great learning experience for your children as they have input into their finances.

2. Rather than focusing solely on paying down your mortgage, consider contributing to your RRSP instead unless the interest rate on your mortgage is 3% higher than the expected rate of return in your RRSP and you are committed to contributing your annual mortgage payments to your RRSP once your mortgage is paid off. If you don’t meet the two criteria mentioned, then the tax savings and tax deferred growth in your RRSP will set you up for more financial success than paying off your mortgage first.

3. Make sure you claim your RRSP deductions in a year that will most effectively maximize your tax savings. You don’t have to claim your RRSP contributions in the year that you make them. In fact, you can carry them forward to any future year. So if you know you will be earning more in 2011, then it’s better to only claim a portion of your RRSP contributions for 2010. (It’s often wise to claim just enough to bring your income below the lowest federal tax bracket and claim the remainder of your contributions in a future year.)

4. The higher wage earner should consider contributing to a spousal RRSP in order to lower income taxes payable and split income at retirement. Another way to use the spousal RRSP is in the case where a couple is planning on having children in the next 3 to 4 years and they already know that one parent will remain at home full time. For instance, if you know you want to be a stay-at-home Mom, consider having your husband contribute into a spousal RRSP in your name. He benefits from the income tax deduction now, and then down the road when you are no longer working, you can withdraw funds from the spousal RRSP and the money will be taxed in your name as long as the money has been in the account for at least 2 calendar years. When you take the money out, you will be at a much lower tax bracket and may not even have to pay tax on the money withdrawn.

5. If you are entitled to a bonus through your work, unless you need the money right away, consider having your employer put it directly towards your RRSP. By doing so you won’t have to pay income tax on your bonus so the full amount of money will be invested and the growth is tax deferred.

There are many tax saving strategies out there for using an RRSP. Make sure that you are making the most out of your RRSPs in order to save you and your family money.

August 11, 2010

Taxes

Can I Claim Moving Expenses As A Tax Deduction?

It is important for Canadians to educate themselves on any and all possible tax deductions. As Canadians pay more than 40% of their annual salaries to taxes through income tax and sales tax, it is key for us to save on taxes wherever possible.

Believe it or not, there are times when a Canadian can actually claim their moving expenses and receive a tax deduction. For instance, if you moved during the year and established a new home to start a new job or business, or if you are a full time student you may qualify for the tax deduction.

Eligible moving expenses include transportation and storage costs for household items, traveling expenses such as meals and accommodations, etc. You can also claim some expenses related to the selling of your previous home such as advertising costs and legal fees.

May 8, 2010