Save your Taxes
Posted by Gail | Filed under Taxes
People are always telling me why they can’t save. In the next breath they tell me about the tax refund their getting. And when I asked who was getting refunds, 75% of the people who responded said they were getting money back.
Why would you give the government an interest-free loan? Don’t the 38% of people who “got back a big refund” realize that they could be earning interest on that money they’re lending to the government interest-free. It may not be a lot of interest, but 2% is still better than 0%.
Want to keep more of your money in your pocket where it’ll do YOU some good?
Here’s a form that very few people use, but is remarkably useful for keeping money out of the government’s hands: Form T1213. This form let’s you request permission from the Tax Man to have your employer reduce the amount of income tax taken off of your paycheque every month.
If you can demonstrate that you’re eligible for certain recurring deductions that will reduce your tax bill at the end of the year – you can trade in your tax refund for more take-home pay. Do you make monthly RRSP contributions by way of pre-authorized withdrawal? You’re eligible. How about child-care expenses? If you’re tithing monthly you can do it for your charitable donations. If you have rental losses, interest expenses on investment loans or carrying charges, those are eligible too.
You’ll have to fill out the form and send it to the Tax Man each year. And NOW is the perfect time for 2012. Once you’re approved, the Tax Man will provide instructions by letter to you, which you then give to your employer, who will adjust your pay for the remainder of the year.
Fill out Form T1213 and get the Tax Man’s approval and instead of paying extra tax and getting refunded, you’ll pay less tax on an ongoing basis so you’ll have more cash that you can then use to establish an automatic savings plan. Whether you send that money to your RRSP, your TFSA or your high-interest savings account, it’s way better in your hands than in the tax man’s.