Pierre Juneau, Financial Planner for Desjardins Financial Services Firm Inc.. wrote a list of tips to help Quebec in their investments in their RRSP. You'll find advice very advised on the site QuickTax covering a variety of topics concerning your taxes. In addition, QuickTax Maximum Refund Guarantee its users.
Q: When can I contribute to an RRSP and what is the maximum deductible?
A: To deduct a fee (not yet deducted) for a given year, you should have done after 1990 or the first 60 days after the end of the year.
For 2008, as this day (March 1, 2009) is a Sunday, the deadline is postponed to Monday, March 2, 2009.
You will always find your maximum deductible on your federal Notice of Assessment from the previous year.
For 2008, the maximum (depending on your notice of assessment for the year 2007) consists of the balance early in the year of your accumulated unused deductions (the maximum deduction in 1991 generated less contributions deducted during the same period) plus 18% of earned income in 2007 (maximum $ 20,000), minus your pension adjustment in box 52 of the 007 T42 sheet if you have a pension plan with the employer.
Q: In determining our maximum deductible for RRSPs, what does "earned income" and "pension"?
A: The "earned income" includes mainly the net employment income (including taxable benefits minus deductions related to employment), business, rental property, disability pensions / QPP PRC and taxable alimony received, which must be subtracted from net losses of companies, rental property and alimony deductible.
The "pension adjustment" usually corresponds to the expected value of benefits earned during a year in a Plan pension plan (RPP).
The employer determines and indicates in box 52 of T4 produced that year to the employee.
Q: What is a spousal RRSP, and is it still relevant, given the split retirement income between spouses allowed since 2007?
A: A spousal RRSP is a plan in the name of your spouse (s) in which you pay all or part of your contributions deductible from your income under the Canada Revenue Agency (CRA) , to split with him your future retirement income.
The total contributions you make to your RRSP and your spouse (e) can not exceed your maximum deductible, and contributions to his RRSP will not change his.
For married couples who have not withdrawn from the family patrimony, the Spousal RRSP is still a very relevant tool for several reasons. For example, it provides protection for fractionation in the event of abolition of the governments of certain other retirement income introduced in 2007.
Moreover, contributions and accumulated earnings in such an RRSP can enjoy it too, among others, two very useful programs on family financial and tax planning: the Home Buyers' Plan to (HBP) and the Incentive Plan (LLP), thus doubling their earnings potential for the couple.
By cons, if couples are not subject to the rules of family assets (including spouses), recall that the use of spousal RRSP requires a written agreement to share in this regard to protect the contributor if bursting of the couple.
In conclusion, the contribution to a spousal RRSP is still a tax planning strategy and relevant financial, analysis to evaluate each situation.
Q: What is excess contribution of $ 2,000 allowed in an RRSP and what are the advantages of using this strategy?
A: The tax laws can make and maintain thereafter an excess contribution of $ 2,000 to your RRSP, you are generally limited to contribute each year thereafter your maximum deductible on your federal Notice of Assessment for the year previous tax.
For the last year you will be entitled to a deduction, it will be important to take into account the contribution already made to put out your RRSP.
The advantage of this strategy is to accumulate, the tax-free in your RRSP, the income of that $ 2,000 over a long period.
note here that every dollar above that threshold of $ 2,000 allowed for excess contributions could generate a special federal income tax.
Finally, note that the excess contributions are relevant only if the annuitant maximizes already use the TFSA (savings account tax-free).
Q: What are the eligible pension income splitting (up to 50%) between spouses since 2007?
A: The eligible pension income of a taxpayer is generally the sum of eligible pension income credit federal:
1. Regardless of age: the taxable portion of annuity payments under a pension plan (RPP);
2. It can add the annuity payments under a Registered Retirement Savings Plan (RRSP) or Deferred Profit Sharing Plan (DPSP) annuity payments and payments under a registered retirement income fund ( RRIF) or Life Income Fund (LIF), and the interest portion of any annuity only if age 65 or older by year end or if he has received following the spouse's death.
Do not confuse this new measure with the division between the spouses pension from the QPP permitted for several years.
Indeed, it is not eligible for the new measure, but its division according to the formula the Board uses the fact that each spouse may receive a portion.
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