confused*tax 2008

[jojochiu]

I made a little over $30K in 2007 but im quite confused in the amount of taxes i paid...when i calculate it..seems like i paid over $7K in taxes...which seems soo ridiculous....

I donated some money to my church..approx. $1K..and also I purchased an RRSP approx. $6K...jus calculating and seems like I should only be paying approx. $3K in taxes...does that mean the gov't will gimme back approx. $4K..???


someone help~

[Thalo]

7/30 is about 23%, so that seems about right for withholding taxes on your income. If you contributed $6K into an RSP, that brings your gross taxable income down to $24K. The church donation is a tax credit and I believe it reduces your federal taxes (don't know about provincial) by about $150.

[Jucius Maximus]

This is the purpose of filing income tax returns.

The whole process of filing your income tax is what balances these things out so you will get back (or pay) any imbalances in your income taxes.

From your description, I'd guess that you will be getting a nice fat tax return cheque this year.

[MacGyver]

According to http://www.walterharder.ca/T1.html with the info you gave you should be getting about $4500 back, depending on what province you're in.

You should submit a T1213 form to CRA immediately which will allow you to reduce the amount of income tax your employer takes off your paycheque. Then you have the money when you earn it and you can do what you want with it, and not over a year later with no interest.

[jojochiu]

This is the purpose of filing income tax returns.

The whole process of filing your income tax is what balances these things out so you will get back (or pay) any imbalances in your income taxes.

From your description, I'd guess that you will be getting a nice fat tax return cheque this year.

if i do get a big fat cheque back...i'll treat ya to dinner..hows dat?

[hdancey]

if i do get a big fat cheque back...i'll treat ya to dinner..hows dat?

get out your wallet then, because based on what you've said, you should be getting at least 4 grand back.

[Jucius Maximus]

if i do get a big fat cheque back...i'll treat ya to dinner..hows dat?

LOL, I'll agree to that! And yes, you will in all likelihood get a big fat cheque.

[jojochiu]

thanx

[dutchca]

According to http://www.walterharder.ca/T1.html with the info you gave you should be getting about $4500 back, depending on what province you're in.

You should submit a T1213 form to CRA immediately which will allow you to reduce the amount of income tax your employer takes off your paycheque. Then you have the money when you earn it and you can do what you want with it, and not over a year later with no interest.

Not only +1, but +10000

You just gave the CRA an interst free loan of about $4000+

[jojochiu]

According to http://www.walterharder.ca/T1.html with the info you gave you should be getting about $4500 back, depending on what province you're in.

You should submit a T1213 form to CRA immediately which will allow you to reduce the amount of income tax your employer takes off your paycheque. Then you have the money when you earn it and you can do what you want with it, and not over a year later with no interest.

im kinda reading thru the T1213 form and seems a little bit confusing...more details pls if possible. thanks a million!!

[jeeva86]

^^, same here, I'd like to keep my money and not let the CRA jack it away for 12 months. I have my tuition credits saved up so I'm good for 2 years, although 1 year just passed. I thought I would have to do this with my employer, no? Can I use this form and be tax free for the remaining of the year?

It says tax reduction, does that mean they will still take a percentage?

[MacGyver]

The T1213 form is pretty easy to use, just enter the dollar amounts that you want CRA to NOT tax you on over the course of the year. So for the OP's example, (s)he'd enter $6000 for RRSP, and $1000 for charitable donations, for a total of $7000. The tax rate for any income below $37,885 is 15%, so you would have $7000X15%=$1050 less tax deducted from your pay.

The key to getting CRA to approve your request is to submit relevant documentation to back up your claim. In the case of RRSP, you need to have some sort of regular contribution over the year (monthly, biweekly, etc), and send a copy of that agreement with the T1213. If you do a last minute contribution, then that doesn't qualify you for a reduction in the tax deducted at source because they want to encourage you to save over the year. And not contributing to your RRSP over the course of the year means you're losing out on investment income.

Similarly, with church donation receipts, include a copy of past receipts if you're a regular giver. The last two years I also wrote a letter to go with the T1213 that said something like "In the last two years, I have given to my church regularly to the tune of $xxxx and this year I anticipate giving $xxxx based on xx% of my gross income, etc.) - they approved it both times I applied.

One last thing, don't expect a huge jump in your take-home pay. If CRA permits your employers to reduce the amount of tax they deduct from your paycheque by say $2000 over the course of the year, that's only $38 every week - but if you're on a tight budget, that can help immensely. Or set up an automatic savings plan for that amount and use the money at the end of the year for Christmas - with interest!

jeeva86: I don't know if you can use education tax credits to apply with the T1213. Form TD1 lets you do it but only if you are enrolled in that tax year. You can always try the T1213 and the worst they can do is turn you down.

[jeeva86]

Can I send the TD1 through a tax software with my 2007 return? Why can I only do it if I'm enrolled that year? It doesn't make sense if I have my saved up credits.

[MacGyver]

Read the instructions for completing the TD1 on page 2 of the TD1 form. You sign the form and give it to your employer. Every place I've worked at for the last 10 years has asked me to complete one, usually in November of every year.

It might be worthwhile to call CRA's help hotline and ask them if there is any way to apply your saved up education credits to reduce your income tax deducted. http://www.cra-arc.gc.ca/contact/phone-e.html