Hello David,
I just received a severance payment. What would be the best way to invest this money without incurring so much tax from the government. I have so much room for my RRSP. I am thinking of dumping it to my RRSP and just claiming my contribution every tax year. What do you think. Thanks for your advise.
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david ingram replies:
Using an RRSP deduction is the easiest and safest way to cut down income tax and spread it out.
However, a better use might be to pay the tax and pay down a non-deductible mortgage or pay the tax and use the rest as a down paymnet on a house or condo if you do not own one now.
Paying off non-deductible debt can b e a better long term use of money than an immediate tax dedcution.
You should find a financial consultant in your area who will give you a written financial plan.
Some like Fred Snyder (www.mutualfund101.com) will give you such a plan as part of his sale or 'no sale' process.
Fred also gives two free seminars a week for clients and potential clients or just someone who wants to drop in. There are about 25 different seminars which we used to charge significant dollars for. They aree broken down into income tax, estate tax, estate planning, financial planning, buying your first house, mortgage interest as a deduction, etc.
There are not a lot of financial consultants who operate like Fred but you might find one in your area.
By the way, you can listen to Fred every Sunday morning on CKBD radio in Vancouver or on the internet at www.600am.com from 9:00 AM to 10:30 AM Vancouver (LA) time. The program is called "IT'S YOUR MONEY"
I am a guest on the program on the last Sunday of every month.
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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" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram
deals on a daily basis with expatriate tax returns with multi
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