It’s income tax season again. Doesn’t it feel like we just did this? The season seems to just creep up on us! And if you are like many Canadians, you forget about your RRSPs and your contribution percentages until it is too late. And, for a great many of us, the whole RRSP thing is so hard to follow and understand, that we simply avoid the topic altogether! Luckily, today is not too late – but ALMOST! The deadline is looming and rapidly approaching to contribute to your 2018 RRSPs if you want to be able to maximize the return on your income taxes. If you need help getting your contribution done today, or are short on the funds to make it happen, READ ON because iCASH.ca can help!
Whether you are planning your retirement in the upcoming years or retirement isn’t even a blip on your radar, it is never too early or late to be contributing to your Registered Retirement Savings Plan (RRSP). iCASH.ca has come up with the top tips to make sure that you make the most of today and tomorrow (the RRSP deadline), no matter your income status or credit status. Read on for the top tips to make the most of your 2018 RRSPs:
1. MAXIMIZE YOUR TAX SAVINGS USING YOUR RRSPs
In a perfect world, we would all use the full contribution amount allowed by the government annually. But, if you are like most Canadians, that just isn’t doable. But what is doable is a last minute RRSP loan that you immediately use to pay into your RRSPs. Although you will pay interest on a loan, the long-term benefits outweigh the interest costs. In addition, this contribution just might be the boost needed in order to augment a better return on your income taxes, thereby paying for itself!
2. HOW DO I KNOW HOW MUCH OF A TAX REFUND I WILL GET?
You can quickly and easily calculate how much of a refund you can expect based on your RRSP contribution amount. Basically, you need to find your marginal tax rate (you can find your marginal tax bracket based on your income here.) Then, with that percentage amount, you can figure out how much you should get as a return on your taxes. For example, if your tax rate is a rate of 30%, and you contributed $1,000 into your RRSPs, you can expect a return of $300.
3. MARGINAL TAX RATE? SEEMS COMPLICATED! HOW CAN I BE SURE ABOUT THE AMOUNT?
If the idea of trying to figure out your “marginal tax rate” and making complex calculations seems daunting, don’t worry about it! You are definitely not alone! Another easy-peasy way to get the EXACT amount of your return, is to use an income tax filing software such as TurboTax or uFile.ca to calculate what your return would look like with different amounts. You can play around with the amount you would need to contribute in order to get the return that you want.
4. OK – I FIGURED OUT HOW MUCH I NEED. BUT I AM BROKE THIS WEEK. CAN IT WAIT UNTIL NEXT PAYDAY?
Well, yes and no. If you want to get a return on your income taxes being filed this year, no, you cannot wait. The deadline to contribute to your RRSPs for 2018 is 60 days into 2019. That means Friday, March 1, 2019. So no, you cannot wait until your next payday in order to contribute towards your 2018 RRSPs. iCASH.ca offers loans in order to contribute to your RRSPs that can be paid back in 1, 2, or 3 repayment instalments (based on your pay periods). If you apply today, you can have your funds sent via eTransfer same day and contribute to your RRSPs before the deadline.
But yes, you can also contribute to your RRSPs next week after your next payday, however those contributions will count towards your 2019 income taxes which will be filed next year (2020).
RRSPs are a very wise, yet sometimes confusing, investment towards your retirement and future. Making sure to contribute annually is a smart move. iCASH.ca can help you contribute on time using our online application at iCASH.ca or using our iOS or Android apps.
Happy income tax season!