RRSP withdrawal - Marginal Tax rates - international non-resident cross border income tax help estate family trust assistan
I plan to have a low income year for 2007. I tried to withdraw some money from that account but the bank
said there will be a federal withholding tax on the withdrawal. As such I backed off from the transaction and just used money from a regular savings account.
Did I do the right thing?
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david ingram replies:
If your taxable income is less than $1,500 or so, you can take the $7,500 out tax free. The bank HAS TO withhold tax on your withdrawal. However, when you file your 2007 Canadian Income Tax return, you will get the tax back. If your taxable income is already $9,000 or so (low) and you take $1,000 from the RRSP, they will withhold 10% or $100 but when you file your return you will owe about another $150 depending upon what province you live in because the minimum tax rate is about 25% across Canada (21.3% in BC). If your taxable income is already $36,378 in BC, you will pay 31.18% tax on $1,000 out of your RRSP so you would owe $211.80 more than the $100.00 tax withheld.
And, I have no idea whether you should take it out of your RRSP from the information in the question.
_____________________________________________________
david ingram wrote:
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office)
$1,600 would be for two people with income from two countries
David Ingram expert income tax help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
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Disclaimer: This question has been answered without detailed
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David Ingram gives expert income
tax & immigration help to non-resident Americans & Canadians from
New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
authority.
Phone consultations are $400 for 15 minutes to 50
minutes (professional hour). Please note that GST is added if product remains in
Canada or a phone consultation is in Canada.
This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only - no self employment or rentals
or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration expert"
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