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Thread: Overcontribute to RRSP?

  1. #21
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    This thread is full of reading > poster fail, and misinformation fail.


    Originally posted by eblend


    Basically, the main question is this, say my dad makes 60k per year, the first $10,320 isn't taxed at all, so the remaining 50k is taxed. Say from that 50k he gets taxed $10k. If he that same year contributed 50k into his RRSP he will get all 10k back, what if he decides to contribute 60k that year, is there any benefit to that? He has already got all the taxes back that he paid that year, will contributing more yeild any benefit (outside of the compound interest on the actual interest paid)
    No, he cant receive more money back, then he paid in taxes for THAT year, even though he has all that unused RRSP contributions from previous years.

    In your example, he can only get back the $10k in taxes paid that year, so contributing $60k is no different (on a tax refund) than $50k. So I suggest if he doesn't care about the compound interest, you do the math with online calculators (or quicktax), to figure out what the most he should put into rrsp's is.
    Last edited by Tik-Tok; 01-09-2010 at 10:06 AM.

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    Default Re: Re: Re: Overcontribute to RRSP?

    Originally posted by eblend


    Basically, the main question is this, say my dad makes 60k per year, the first $10,320 isn't taxed at all, so the remaining 50k is taxed. Say from that 50k he gets taxed $10k. If he that same year contributed 50k into his RRSP he will get all 10k back, what if he decides to contribute 60k that year, is there any benefit to that? He has already got all the taxes back that he paid that year, will contributing more yeild any benefit (outside of the compound interest on the actual interest paid)
    Nope. And depending on your current income/expected income you usually only contribute enough to not pay taxes in the higher tax brackets. Obviously if you don't expect to be making money in the higher brackets you should use up your existing room. It's not very hard to work out the exact math, but a financial planner can help you if you're unsure.

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    Default Re: Re: Re: Re: Re: Re: Overcontribute to RRSP?

    Originally posted by dezmarez



    haha what are you talking about?

    he said it exactly how it is...

    limit is 21k in a given year for RSP contribution...
    so you make 1,000,000 the most you can put in is 21k...

    now say you dont contribute to your RSP over 3 years...
    and build up contribution room of 60k,
    you can put all 60k in one shot!!!

    stop spreading miss information
    No, that is not true. The maximum contribution limit for 2009 is 21k no matter how much your contribution limit is.

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    Default Re: Re: Re: Re: Re: Re: Re: Overcontribute to RRSP?

    Originally posted by Nigel Mansell


    No, that is not true. The maximum contribution limit for 2009 is 21k no matter how much your contribution limit is.
    Technicalities. Yes the limit FOR 2009 IS 21K, but he can still use his unused portions from previous years on the 2009 tax return.

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    Yeah, your 2009 limit is 21k, but unused contribution room from previous years carries over, and DOES add to the current year contribution room.
    Tik-Tok has it exactly right, as usual.
    Silly people focus on the math.

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    Default Re: Re: Re: Re: Re: Overcontribute to RRSP?

    Originally posted by Nigel Mansell


    Don't listen to this guy, he is full of s h i t! You can only put in 21k for the 2009 tax year, any more than 2k over that limit and there are severe tax implications.


    Go back to your UK tax system, Nigel or learn to use google before calling someone out

    The maximum RRSP deduction limit for 2009 is $21,000. However, if you did not use all of your RRSP deduction limit for the years 1991-2009, you can carry forward the unused amount to 2009. Therefore, your RRSP deduction limit for 2009 may be more than $21,000.
    http://www.tax-services.ca/rrsp-canada.html

    This is the reason why some people like to save their contribution room and not use it until they are into higher/highest income bracket.

    And Tik Tok just confirm what I said, once you get maximum return for the year, there's no incentive to overcontribute other than the minimum effect of compound interest.

    Don't ever question an Asian about money and how to screw the government out of taxes.
    Last edited by Xtrema; 01-10-2010 at 12:55 PM.

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    Default Re: Re: Re: Re: Re: Re: Overcontribute to RRSP?

    Originally posted by Xtrema




    Go back to your UK tax system, Nigel or learn to use google before calling someone out



    http://www.tax-services.ca/rrsp-canada.html

    This is the reason why some people like to save their contribution room and not use it until they are into higher/highest income bracket.

    And Tik Tok just confirm what I said, once you get maximum return for the year, there's no incentive to overcontribute other than the minimum effect of compound interest.

    Don't ever question an Asian about money and how to screw the government out of taxes.
    \

    Fair enough, I'm man enough to admit when I'm wrong.

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    Got a dumb question and didn't want to start a new thread.

    Let's say I have 50k contribution room for 2020 NoA.

    From March to Dec 2020, my RRSP receipt shows $45k.

    Is my contribution limit from Jan to Feb 2021 $5k in order not to "overcontribute" since I need to report that on the 2020 tax year, or is it a grey area where it's a combination of the $5k remaining and estimated lesser 18% of the deduction limit for 2021?

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    Quote Originally Posted by Disoblige View Post
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    Got a dumb question and didn't want to start a new thread.

    Let's say I have 50k contribution room for 2020 NoA.

    From March to Dec 2020, my RRSP receipt shows $45k.

    Is my contribution limit from Jan to Feb 2021 $5k in order not to "overcontribute" since I need to report that on the 2020 tax year, or is it a grey area where it's a combination of the $5k remaining and estimated lesser 18% of the deduction limit for 2021?
    It's $5k. Reasonably confident I'm right.
    As an aside, over contributing isn't that big a deal by a little bit and only for 1-2 years. I fucked up by a lot for 3 years and it wasn't a huge deal to fix. Maybe I was just lucky.
    *Not engineering advise

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    Over contributing by a small amount is no big deal, but no benefit. Better to take any extra and just cram into TFSA.
    Silly people focus on the math.

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    Quote Originally Posted by Disoblige View Post
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    Got a dumb question and didn't want to start a new thread.

    Let's say I have 50k contribution room for 2020 NoA.

    From March to Dec 2020, my RRSP receipt shows $45k.

    Is my contribution limit from Jan to Feb 2021 $5k in order not to "overcontribute" since I need to report that on the 2020 tax year, or is it a grey area where it's a combination of the $5k remaining and estimated lesser 18% of the deduction limit for 2021?
    It's a grey area as any contributions you make in the first 60 days of the year can count towards your 2020 limit or your 2021 limit. It's up to you (or your accountant) as to how it's claimed and then up to you to make enough in 2021 to actually make enough money that the deduction makes sense.

    Theoretically, in your example, if you put in another $10K, you would still only claim $50K for 2020 tax year and carry forward the additional $5K for your 2021 taxes. Hope that helps!

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    If I overcontribute my RRSP can I put some towards my spouse's income tax?

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    Quote Originally Posted by skandalouz_08 View Post
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    It's a grey area as any contributions you make in the first 60 days of the year can count towards your 2020 limit or your 2021 limit. It's up to you (or your accountant) as to how it's claimed and then up to you to make enough in 2021 to actually make enough money that the deduction makes sense.

    Theoretically, in your example, if you put in another $10K, you would still only claim $50K for 2020 tax year and carry forward the additional $5K for your 2021 taxes. Hope that helps!
    Thanks. This part makes sense and what I initially thought but wasn't sure. I will just be safe and call CRA to ask and confirm this. I read a lot of places online that because the contribution duration is from March to February, that is your contribution room limit for that tax year since you need to report all your contribution whether or not you carry it forward. So it is the first 60 days that confused me in terms of how they consider overcontribution.

    Edit: Essentially contribution and what you deduct for that tax year are 2 different things. If I contribute more than my contribution room for 2020 within the first 60 days of 2021, it is ok as long as I know it is under the lesser of 18% income limit for 2021's contribution room calc. Then I just make sure I don't deduct more than my contribution room limit for 2020.

    PENIS MAN IS WRONG!
    @skandalouz_08 you seem to know your stuff. Care to help me on questions I have on how to do rental income on my taxes? May have a few questions... haha. I don't trust those tax preppers
    Last edited by Disoblige; 02-17-2021 at 12:33 AM.

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    Quote Originally Posted by HiSpec View Post
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    If I overcontribute my RRSP can I put some towards my spouse's income tax?
    I think the way you do this is to contribute to your spouses RRSP.
    Silly people focus on the math.

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    Quote Originally Posted by Disoblige View Post
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    Thanks. This part makes sense and what I initially thought but wasn't sure. I will just be safe and call CRA to ask and confirm this. I read a lot of places online that because the contribution duration is from March to February, that is your contribution room limit for that tax year since you need to report all your contribution whether or not you carry it forward. So it is the first 60 days that confused me in terms of how they consider overcontribution.

    Edit: Essentially contribution and what you deduct for that tax year are 2 different things. If I contribute more than my contribution room for 2020 within the first 60 days of 2021, it is ok as long as I know it is under the lesser of 18% income limit for 2021's contribution room calc. Then I just make sure I don't deduct more than my contribution room limit for 2020.

    PENIS MAN IS WRONG!
    @skandalouz_08 you seem to know your stuff. Care to help me on questions I have on how to do rental income on my taxes? May have a few questions... haha. I don't trust those tax preppers
    Who else could take something as simple as "from March to February" and then treat it like it was as complicated as PDE's?
    Oh Canada.

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    Our tax code is ridiculously complicated and it is a detriment to the citizens of the country.
    Silly people focus on the math.

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    Quote Originally Posted by ThePenIsMightier View Post
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    Who else could take something as simple as "from March to February" and then treat it like it was as complicated as PDE's?
    Oh Canada.
    Yeah, true lol.

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    Quote Originally Posted by Disoblige View Post
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    Thanks. This part makes sense and what I initially thought but wasn't sure. I will just be safe and call CRA to ask and confirm this. I read a lot of places online that because the contribution duration is from March to February, that is your contribution room limit for that tax year since you need to report all your contribution whether or not you carry it forward. So it is the first 60 days that confused me in terms of how they consider overcontribution.

    Edit: Essentially contribution and what you deduct for that tax year are 2 different things. If I contribute more than my contribution room for 2020 within the first 60 days of 2021, it is ok as long as I know it is under the lesser of 18% income limit for 2021's contribution room calc. Then I just make sure I don't deduct more than my contribution room limit for 2020.

    PENIS MAN IS WRONG!
    @skandalouz_08 you seem to know your stuff. Care to help me on questions I have on how to do rental income on my taxes? May have a few questions... haha. I don't trust those tax preppers
    @Disoblige Feel free to shoot me your questions in a PM. I have a couple rental properties and do my own taxes so I have a decent understanding of rental income and can hopefully answer your questions.

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    Quote Originally Posted by ExtraSlow View Post
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    I think the way you do this is to contribute to your spouses RRSP.
    I miscalculated my contribution this year and I am hoping I can forward a portion of it to my spouse when I complete my income tax.

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    Quote Originally Posted by HiSpec View Post
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    I miscalculated my contribution this year and I am hoping I can forward a portion of it to my spouse when I complete my income tax.
    Could you redirect it on to your HBP repayment if you have one - or does that not take away the over contribution.

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