Friday, February 27, 2015

Eligible or Ineligible

First of all...SLUGGY IS HAVING ANOTHER GIVEAWAY!! Go HERE to get on board!! Someone has to win and it might as well be YOU!! It's a "PAMPER YOURSELF" basket of goodies and who doesn't need pampering at this time of year!! Go on...I know you want to!!



Feeling sluggish (no offence Sluggy!) This winter is killing my energy and motivation. I dragged my butt through vacuuming today and I did my taxes!! I also wasted a lot of time waiting for phone calls. Phooey.

Taxes: I made a mistake this year. I've been doing my own taxes for 40 years or more and have never had any issues...until now. I over-contributed to my RRSP.  Yessir, I did, I confess. Please don't use the handcuffs officer.....

The problem was the $5,000 early retirement incentive the school board gave me last June. I assumed, incorrectly as it turned out, based on what I read on the Canada Revenue Agency website, that I could put all of it into my RRSP, that it was eligible.  But when I got my T4 yesterday the whole amount was listed as ineligible. I was only allowed to put part of it into my RRSP. Well, I did my taxes anyway and sent them away. I'm still due a good-sized refund so if I owe CRA any money they can take it out of that.

Alternately, I'm also allowed to remove the excess out of my RRSP and pay the tax on it. OR (and I like this idea the best) I can send a letter to CRA explaining:
  • why you made excess contributions and why this is a reasonable error; and
  • what steps you are taking, or have taken, to eliminate the excess contributions.
As I'm planning to withdraw $5,000 after March 1st I may be covered. I'm going to give it the old college try anyway and mail off a letter in a couple of days begging that my stupidity be forgiven.

Have you ever had issues with Uncle Sam?

8 comments:

  1. You call him Uncle Sam in Canada? Cool. Hope Uncle Sam cuts you some slack.

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  2. Good Question Kim. ;)
    Well its just as confusing in the US to do your taxes. If they made it easy to understand than we could understand how easily they screw us over.

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  3. livingrichonthecheapFebruary 28, 2015 at 11:56 AM

    Hubby overcontributed to his TFSA but Scotia I trade who we use for all our investing didn't catch it so the account thinks it will be fine - it was a small amount of money. I hate dealing with the Government at tax time - I will be so happy when the corporate and personal taxes are behind us.

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  4. It's safe to over contribute up to $2K into an RRSP without facing penalties. :) As for Kim's question, I usually just call them the CRA.

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  5. We don't have an "Uncle Sam" equivalent here in Canada - he seems to be pretty universal :)

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  6. If we could understand then maybe we wouldn't get screwed over - there's a method to their madness!

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  7. Your taxes are so much more complicated than mine!

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  8. That's good to know! I think I did read about that somewhere in my online research. I've sent my taxes away and will wait and see what I need to do.

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