8 Things That Will Put More Tax Money In Your Pocket

8. THINGS THAT WILL PUT MORE TAX MONEY IN YOUR POCKEΤ "THE ONLY THING CERTAIN IN LIFE IS DEATH AND TAXES." That's how the saying goes. Yes fellow Canadians, we all have to pay the taxman. But according to a Financial Post survey, 41% of Canadi- ans actually find pleasure in filing their tax returns. Wow. Should we therefore be surprised that some taxpayers are paying more tax than necessary? There are several tax-saving approaches that anyone can take advantage of. Read the list below, apply them this tax-season and keep more of your money in your pocket. TAKE ADVANTAGE OF 01 INCOME-SPLITTING Did you know? Lower incomes are taxed at lesser rates than higher incomes. Couples can save money by shifting the income of someone in a higher tax bracket to their partner in a lower tax bracket. 02 TAKE ADVANTAGE OF PENSION-SHARING Like income-splitting, couples can share their Canada Pension Plan (CPP) income if they are aged 60 or over. Doing so puts more money into the pocket of the lower-income partner in the relationship. To do so, you must be receiving your pension (or be eligible to receive it) and be living with your partner. FILE A TAX RETURN 03 PECIALLY IF YOU HAVE NO INCOME Yes, really! Zero-income earners often think that they don't need to file a tax return. But they are missing out on opportuni- ties to receive benefits and credits such as the Canada Child Tax Benefit and the GST/HST credit. The government provides benefits through the tax system, but if you don't complete a tax return, no benefits for you. CLAIM ALL ELIGIBLE MEDICAL 04 EXPENSES. This is one of the most overlooked tax-breaks. Did you know that Canadian families spend over $500 out-of-pocket for medical expenses every year? The tax credit list available for medical expenses is large, so be smart and keep your medical receipts. Any costs over the amount automatically deducted by the Canada Revenue Agency puts tax money back in your pocket. OVER CONTRIBUTE $2,000 TO YOUR RRSP 05 You can over-contribute to your RRSP by $2,000 each year before the excess contribution penalty kicks in. Therefore, even though you can't deduct this $2,000 over-contribution, it can reside and grow in your RRSP for years on a tax-deferred basis. FILE ON TIME 06 Prolonging the inevitable is costing you money -- many people file their taxes late and by doing so incur late-filing interest and penalties. This is money that could have stayed in your pocket. For Canadians, your personal taxes must be filed by April 30th to avoid a late filing penalty. MINIMIZE TAX ON RRSP 07 WITHDRAWALS Money can be withdrawn from your RRSP at any time. But some methods of withdrawal are more tax-beneficial than others. Know that when your RRSPS are withdrawn, both earnings and principal are fully taxable. Therefore, avoid withdrawing a lump sum all in the same tax year -- it can be expensive. Instead transfer your funds to a Registered Retirement Income Fund (RRIF) that provides a steady stream of income throughout retirement. STRATEGIC GIVING 08 Canadians like to give and provide generously to charities. But did you know that it is beneficial to claim charity donations by both spouses together on a single tax return? This is because the first $200 of your donations are avail- able at only a 15% federal tax credit, but any donations beyond that are available at a 29% tax credit. Yes, it pays to double-up and receive the bulk of your donation expenditures at a higher tax credit percentage. April Tax Solutions | Unit 213, 7710 - 5th Street SE | Calgary, Alberta | T2H 2L9