Tax withholding at source

[queerasmoi]

So should I try it on a T1213 and see if they approve it?

Also there's no separate provincial form, but I have about $17K in provincial credits versus about $26K in federal credits. Should I put the higher federal number on this federal form, or the lower provincial number to be conservative?

[adrian2]

So should I try it on a T1213 and see if they approve it?

I'd say, yes -- what have you got to lose?

Also there's no separate provincial form, but I have about $17K in provincial credits versus about $26K in federal credits. Should I put the higher federal number on this federal form, or the lower provincial number to be conservative?

I'd enter the higher number, which is the true federal one. Just be prepared to pony up the provincial difference from an interest free loan next April.

[queerasmoi]

So should I try it on a T1213 and see if they approve it?

I'd say, yes -- what have you got to lose?

Also there's no separate provincial form, but I have about $17K in provincial credits versus about $26K in federal credits. Should I put the higher federal number on this federal form, or the lower provincial number to be conservative?

I'd enter the higher number, which is the true federal one. Just be prepared to pony up the provincial difference from an interest free loan next April.

It might balance out on the whole. If the form is approved and implemented by June, I'll have been paid with full tax withholding for part-time work January-March and full-time work April-May. So if they excessively reduce my withholding rate for June-September, it could be balanced out by the unnecessary tax I paid earlier in the year.

[queerasmoi]

I got a bit sidetracked from filling this out with being so busy at my new job. Just filled it out fully today and I'm going to send it in. Nothing to lose, right?

I will report back the results. I have seen a few references online to using a T1213 for carry-forward education amounts but no actual reports that it was accepted or not.

[queerasmoi]

Well... over a month later, I got my answer.

My T1213 was rejected because... apparently I could have claimed the carry-forward on my TD1 all along. (?!)

I went back and read the TD1, and it clearly indicates schooling in the present year. But nonetheless, the guy I subsequently called at CRA confirmed it: I am allowed to write down my carry-forward amounts on the TD1. So I immediately revised my TD1 and e-mailed the HR person at my company to let her know.

This year I have already had three part-time months of employment and two full-time, during which tax was deducted as normal. The sum of federal credits + basic personal is greater than the income I expect to have had this year, and the sum of provincial credits + basic personal is maybe $5-6K shy of that income figure. So I'm pretty confident that if my federal withholding is reduced to zero and my provincial is reduced to very little, even then I will still be getting a refund next year. I just have to remember to count up my income in December and submit another TD1 in January indicating my estimate of what's left over.

[queerasmoi]

Since handing in the new TD1, today is my first paycheque under the revised calculation. My tax withholding has gone from 12.8% down to 1-2%. What a difference!

It's nice that all those education tax credits are finally paying off. Although it does occur to me - I had the privilege of a debt-free education and a fully-funded graduate school program. For those students who grapple with a high debt load, is it really helpful to endow them with non-refundable tax credits that they can't exercise until they finally make enough money to pay tax? Wouldn't they benefit more from those credits being refundable so they can get the assistance when they need it more?

(Yes, I realize that many students just transfer the credits up to their parents. But that just means that students whose parents *aren't* helping pay for their education will have to wait longer for anyone to benefit from these credits.)

[MALDI_ToF]

Since handing in the new TD1, today is my first paycheque under the revised calculation. My tax withholding has gone from 12.8% down to 1-2%. What a difference!

It's nice that all those education tax credits are finally paying off. Although it does occur to me - I had the privilege of a debt-free education and a fully-funded graduate school program. For those students who grapple with a high debt load, is it really helpful to endow them with non-refundable tax credits that they can't exercise until they finally make enough money to pay tax? Wouldn't they benefit more from those credits being refundable so they can get the assistance when they need it more?

(Yes, I realize that many students just transfer the credits up to their parents. But that just means that students whose parents *aren't* helping pay for their education will have to wait longer for anyone to benefit from these credits.)

Cure the disease at the source. Teach children in elementary school about money. As they progress through to high school start exposing them to credit, investing, budgets, taxes, costs of educations. Educate them so that when they leave high school they have a more solid understanding of how money works in this world and the pros and cons of taking on debt. It's like a vaccine where we can stop the illness before it starts!

As for current people dealing with high debt load, I don't know. A part of me feels sorry for them, but they are responsible for their debt. They need to learn that you might be bailed out of problems as a child, but as an adult, that won't happen. Perhaps allow the education tax credits to be put towards paying down government debt. As for things like student line of credits issued by banks...don't know about that one. Perhaps making the credits refundable, but the cheque goes directly to the bank, after those are cleared, if there is any left then the student can get it as a cash refund.

Silly ideas...I still think educating children when they are young is the way to cure this debt problem society seems to have. My school never taught me a thing about money - not even a simple budget. Thankfully my parents are financially responsible and had the good sense to talk to me openly about money and what their financial situations were like as I was growing up. I learned a lot about taxes, credit cards and mortgages and car loans from them and when I was old enough to get a credit card of my own I knew I needed to treat it like cash and pay it off in full every month. I have to admit though that I learned nothing about investing from my parents - that I had to teach myself . But I did have money to invest thanks to my parents teaching me not to throw it away and get into high debt.

1. Educate children about money (should be doing this regardless)
2. Let education credits go directly to paying off government student loans if they want the money now. Even offer an incentive...$1.50 of debt removed for every $1 of credit applied.

Enjoy your "higher paycheque" Queerasmoi!!

[queerasmoi]

As MALDI and I know well from our in-person friendship, we don't agree on much in the way of worldview. But I can get on board with his idea that the education credits be applicable directly against government student loans, perhaps even at a bonus rate.

[MALDI_ToF]

As MALDI and I know well from our in-person friendship, we don't agree on much in the way of worldview. But I can get on board with his idea that the education credits be applicable directly against government student loans, perhaps even at a bonus rate.

We can agree on a few things. I think usually we disagree on how best to fix something we both agree needs fixing

But we do get some silly people out there getting themselves deep into student loans for the wrong reason. I found this post on a local computer store's forum about a guy wanting to build a $2500 computer and wanting advice (came across it researching computer parts)

"I am going to custom build a computer to play Diablo 3. My friend will help me build it. I won't need a copy of Windows 7 because I can pirate it. I have $3000 left over from my student loan, so I figured I would treat myself this summer. Here's what I have come up with so far ... "

What a wonderful use of a student loan!! At least he is saving money with pirating Windows 7!! (I do not condone pirating)

[erik.lee]

Hi Guys,

I am from Malaysia (ASIA) and have been trading online on US Stock Markets for about a year. So far I managed to skip from any Tax for each Stock Transactions (as I had dclared in W8BEN Form) but I realised there is no way for me to take further advantage on Dividend/Cash payouts from stock holdings.

I am just wondering if CANADA, UK, etc would be providing much better comforts for Foreign Investor like me to minimise/eliminate the taxes before I moved from my current US Online Broker to elsewhere.

Thanks.
Erik
(Foreign investor)

[queerasmoi]

Hi Guys,

I am from Malaysia (ASIA) and have been trading online on US Stock Markets for about a year. So far I managed to skip from any Tax for each Stock Transactions (as I had dclared in W8BEN Form) but I realised there is no way for me to take further advantage on Dividend/Cash payouts from stock holdings.

I am just wondering if CANADA, UK, etc would be providing much better comforts for Foreign Investor like me to minimise/eliminate the taxes before I moved from my current US Online Broker to elsewhere.

Thanks.
Erik
(Foreign investor)

Hi Erik, this thread is about tax withholding from employment income, not investment income.

But in general, if you are living abroad and trying to invest in foreign markets, there is no way around withholding taxes on dividends. There are agreements between countries for a reason.

[MALDI_ToF]

There are agreements between countries for a reason.

And there are lack of agreements between countries for a reason as well

[blackball]

I filled the form out when I started out with my current company. 5 years later and payroll is still assuming I'm deducting the same amount each year (which I am and a bit more) so I end up with only a small refund. Glad my payroll department is so lax cuz it saves me from filling out the form every year

[queerasmoi]

I filled the form out when I started out with my current company. 5 years later and payroll is still assuming I'm deducting the same amount each year (which I am and a bit more) so I end up with only a small refund. Glad my payroll department is so lax cuz it saves me from filling out the form every year

Good to know! But in my case the credits are pretty much just enough to eat up this year's income taxes and then I'll be at normal taxation levels again.

[queerasmoi]

Well it was a nice year of credits.

So hey, this year I'm contributing early in the year a lump sum in-kind from taxable to RRSP using room I already had accumulated, and then once I'm certain of my 2012 taxes another lump sum using the 2012 room.

Can I put these on a T1213, sending evidence to the CRA, and again get deductions reduced at source? Or can I only do that if my RRSP contributions are regular and pre-authorized?

[kcowan]

ISTR that you get the benefit of the doubt that you know what you are doing.