Tag Archives: federal taxes

Does StudioTax Calculate This New Family Tax Cut Income Splitting Reduction For Me?

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2014 is the first (and possibly the only!) year when the government has given us the choice to try to reduce the tax payable by a 2-parent family with children under the age of 18. The maximum benefit has been restricted to $2 000 although they say that the parents are allowed to “split” up to $50 000 of income on their federal (not provincial or territorial) taxes. It’s really just a math-intensive way to give a credit to your federal income tax payable. In fact, there are 2 pages (Schedule 1-A) of math! So I was curious to see if StudioTax would automatically calculate and apply this new benefit to a tax return for a married couple with young children, like mine.

Did StudioTax Calculate the Family Tax Cut For Me?

Yes.

I ran a test case with a married couple with 2 children under the age of 18 filing their 2014 tax return. When asked at the beginning if I wanted to create returns for both husband and wife at the same time I said yes. I also entered the usual information about the dependent children because they need to be listed to claim the Children’s Fitness and/or Children’s Arts amounts. I did not input any extra information directly intended to prompt the program to try to apply the new “tax splitting” for the Family Tax Cut.

StudioTax went ahead and did it though.

Where Does StudioTax Report the Tax Savings Created by this New Family Tax Cut

The actual amount that this pretend “income splitting” is saving you is reported on Line 423 of Schedule 1.

The detailed calculations are in Schedule 1-A.

Do I Recommend Using a Tax Program to Calculate the Family Tax Cut?

Maybe.

It’s not particularly difficult to complete Schedule 1-A by hand with a pencil and a calculator. It is dull and time consuming though.

Given that you can use StudioTax or GenuTax Standard tax software for free, I’d recommend you at least double check your work by using a tax program.

How Much Did We Save Thanks to the Family Tax Cut?

Well, let’s just say we can afford one more dim sum lunch this year but not necessarily with soft drinks. Fortunately I love the tea our local restaurant provides!

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Did you benefit from this Family Tax Cut? Or is it just another source of irritation to you? Should the government really be spending its time tinkering at this level with our tax forms? Please share your views with a comment.

How to Buy a RRSP GIC from Peoples Trust

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Peoples Trust is offering one of the best interest rates for RRSP GICs this year. You can buy a GIC for your RRSP from Peoples Trust website and mail in your cheque to pay for it but if you want to claim it on your 2014 tax return, you have to place your order by the end of February 28.

These instructions assume you do NOT already have an account with Peoples Trust. It’s shorter and faster if you already have an investment with them.

Buying a GIC Online from Peoples Trust for Your RRSP

Go to their website at http://www.peoplestrust.com/high-interest-accounts/rrsp-accounts/rrsp-gic/

Click on the link called Click here to open your account now.

Step 1 The Product Information Page

  1. From the drop-down list click to select the answer to Are you an existing Peoples Trust client?
    I selected No.
  2. From the drop-down list, choose the product you wish to buy.
    I selected RRSP.
  3. From the drop-down list, choose how long you want to invest your money in the GIC. NOTE: It can not be cashed before the end of the term.
    I selected 1 year.
    The Rate box will show you the rate for that choice.
  4. In the Amount box, type how much you want to invest in the GIC. The minimum is $1000.
  5. Click on the Next button.

Step 2 The Contact Information Page

  1. Click to select the button beside the title you prefer such as Mr. or Dr.
  2. Type to fill in the following fields:
    • First Name
    • Initial
    • Last Name
    • Street Address
    • Suite
    • City
    • Postal Code
    • Home Telephone
    • Business Telephone
    • Email Address
    • Social Insurance Number
    • Occupation
  3. And from the drop-down lists select the appropriate answer for
    • Province
    • Date of Birth
    • Gender

Designating Your RRSP Beneficiary

  1. Click to select the option “Yes, I would like to designate a beneficiary to this plan.
  2. Type in the appropriate information in the text fields for
    • Beneficiary First Name
    • Beneficiary Middle Name
    • Beneficiary Last Name
    • Relationship to Account Holder
  3. Then read and if acceptable, click to select the box beside the message:
    “I hereby designate the above as my elected Beneficiary to the said Plan, whereby the Beneficiary will be entitled to all payments and benefits payable hereof in the event of my death. I hereby revoke any previous Beneficiary designated by me and shall ensure this designation is legal and binding pursuant to the applicable Provincial Territories and Federal Laws of Canada, while reserving the right to cancel this designation under the terms and conditions governing the plan.”
  4. ONLY if the contribution is for a Spousal RRSP, click to select “Yes, please include my spouse in my contribution plan.”
  5. Click on the Next button.

Step 3 The Legal Verification Page

The Citizenship and Residency Section

  1. Click to confirm you reside in Canada, the US or Other as appropriate.
  2. If you live in the US please provide your TIN by typing it in the field.
  3. Click to select Yes or No to answer the question Are you a U.S. citizen.

The Third Party Information Section

From the drop-down list, select to confirm whether or not anyone else will benefit from this RRSP contribution.

Note: they are worried about some person hiring or forcing you to “launder” money from illegal activities. Most people will be answering No to this question. It doesn’t mean will your spouse be happy, etc.

The Politically Exposed Person Section
Answer the Yes No question about how important you and your family are in the government, politics and military.

The Intended Use of Account Section

Click to select Retirement.

The Identification Verification Section
Click if you agree to permit Peoples Trust to check your id and credit rating.

Click on the Next button.

  1. Step 4 The Payment Information Page
    You can pay for your RRSP GIC by cheque or by transferring money from another RRSP at another institution.
  2. Click to select your method of payment.
  3. Click on the icon beside Terms and Conditions to review the terms and conditions.
    If they are acceptable, click on the box beside: I agree to Terms & Conditions
  4. Type the Captcha code in the text field.
  5. Click on the Preview button.
  6. If it all looks ok, click on the Finish button.
  7. Write down your deposit confirmation number.

You’ll now need to mail in your cheque or your RRSP transfer form to fund the purchase of the GIC.

The instructions say to make the cheque payable to yourself. I was surprised by that, but the Peoples Trust service representative confirmed it’s correct when I phoned and asked.

Write your deposit confirmation number on the front of your cheque to make it faster.

Mail the cheque to the address provided on the screen. On February 27 2015 this was:

Peoples Trust Company
1400-888 Dunsmuir Street
Vancouver, BC V6C 3K4

Disclaimer: I have not personally purchased a GIC from Peoples Trust, yet.

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Do you use Peoples Trust for your TFSA or RRSP GICs? Please share your experiences with a comment.