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Thursday, August 27, 2009

Less Taxes

I have finally filled out my Form T1213, Request to Reduce Tax Deductions at Source, where the government will tax me less each pay cheque because of my RRSP deductions. The math behind this is because they are over taxing me I get back several thousand dollars at income tax time. If I get a little bit more each paycheque, they will hold onto less tax on my behalf, and I will be able to earn interest on this money (or pay off loans...which is what I plan to do with it).

I have thought about this a bit, and am only having them deduct half of my RRSP deductions, leaving the other half for myself at income tax time. The reason for this is threefold: first, I like getting a little bit of money back at tax time, second, I wouldn't want to try to plan it to the nearest cent and then owe money in March and third, because I took advantage of the Home Buyers Plan, I will start repaying it this year, so I need some of my RRSPs to do so.

I will know in 2-4 weeks if this actually goes through, but I expect that it would. All I needed to send them was a copy from my bank (you can get it from your work if they take RRSPs from you) of my regular payment plan. Once it goes through, the government sends notification to your work and your taxes get lowered. It’s as easy as that! I'll repost on here when it actually goes through.

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