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Tax Tips for Preparing & Filing Your Taxes in Canada
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A huge team of tax analysts & specialists in Canadian taxes help build QuickTax every year - so it's chock full of the deduction-maximizing tips Canadians depend on us for. Whether you use QuickTax or do your taxes yourself, check out these great tips to help you: - Avoid claiming credits that don't apply to you
- Ensure you're getting the most out of the credits that you can claim
- Prepare your taxes accurately
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New Tips (2008 & 2009)
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Common Tips
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Click a Link to View the Tax Tip That Interests You
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Use a tax free savings account (TFSA)... and earn income without paying tax
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The Government of Canada has called it the single most important personal savings vehicle since the introduction of the RRSP. Have you heard about the tax free savings account (TFSA)?
The TFSA became available on January 1, 2009. It allows Canadians aged 18+ to save up to $5,000CDN every year in a TFSA and to withdraw funds and/or investment income - including capital gains - without being taxed. You can also put back the money you've withdrawn without reducing your allowable contributions.
Although there is no tax credit for contributions to a TFSA, Canadians can realize significant savings in using a TFSA to earn interest without paying taxes on that interest.
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Optimize your pension income by splitting it with your partner
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As of 2007, Canadian pensioners became able to split their pension income - whether from a corporate/other pension plan or certain annuities from an RRIF or RRSP - with their resident spouses or common law partners. If you have eligible pension income, you can use this tax opportunity to split up to one half of your pension with your partner, which may mean significant tax savings for you both.
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Realize capital losses in 2009
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Did you know that capital losses can be carried back 3 years to recover tax paid on capital gains? If you had no capital gains in 2009 but you did have losses, you could use your capital loss to offset a capital gain in any of the 3 previous years (i.e., 2006, 2007 or 2008 taxes).
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File a return - no matter what
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Even if you are certain that you have no balance owing or refund due in a given year, file a tax return for that year. Why? Because filing: - Reduces the ability of the CRA to subsequently make arbitrary adjustments to your income and taxes owing for that tax year
- Determines your eligibility for government programs, like the Canada Child Tax Benefit (CCTB), GST/HST credit or any new tax rebates that may be announced
- Reports earned income, which increases your future RRSP contribution room - and we all know the value of RRSPs as tax reduction tools
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Claim your charitable donations wisely
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Did you know that the rate at which you're able to claim your charitable donations nearly doubles for amounts over $200? For that reason, you should not claim less than $200 in charitable donations in any year.
Instead, if you want to optimize your tax situation, carry forward charitable donations (for a maximum of 5 years) and claim them all in a year where your income is higher. You can even combine your donations together with your spouse/common-law partner and claim them all on the return of the higher-income spouse, maximizing the credit.
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Use an RESP for long-term planning, not tax deductions
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Contributions to a Registered Education Savings Plan (RESP) are not tax deductible. However, any earnings on that investment are sheltered from taxation and not subject to tax until withdrawn when the recipient begins post-secondary education.
Limits for contributing to RESPs: - There is no annual limit for RESP contributions (prior to 2007, the annual limit was $4000)
- The lifetime RESP contribution limit is $50,000
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QuickTax Online Support Includes 100s of Current Tax & QuickTax Tips
Use QuickTax FAQs in the Support Centre to get answers to your most pressing Canadian tax questions. Top FAQs include: Get more tax tips now
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