RRSP contributions: clearing up first-60-days confusion
By Gerald Eggert | Feb-22-2012 | Blog, RRSPs
Registered Retirement Savings Plans (RRSPs) are used by millions of Canadians to save for their retirement. Some people choose regular contributions every month, while others wait until the RRSP deadline to make their contribution.
RRSPs are one of the few deductions not tied to the December 31 deadline. Medical expenses, charitable donations, capital gains, children’s arts and fitness credits and others are all limited to the calendar year. However, RRSP contributions made in the first 60 days of 2012 may be claimed on your 2011 tax return.
But the first-60-day rule also causes quite a lot of confusion. You will receive RRSP receipts for any contributions made in January and February 2012, even if you make regular monthly contributions, and those receipts must be recorded on your 2011 tax return. However, while the contributions must be recorded, you do not have to actually claim them. Instead, you may choose to claim the deduction the following year. The same applies for contributions you made from March to December 2011: you do not need to claim all your contributions if you want to save them for another year.
If you find old RRSP receipts from previous years, you cannot add them to your return this year. You will need to file an adjustment to your previous returns to claim the receipt in the right year.
The first-60-days rules is a great opportunity to save some tax money on your 2011 return, but it can also be confusing. If you want to take advantage of this option, ensure you understand how the rules work.
Similar Blog Posts
Buying a house is one of the most monumental moments in life. It’s a big financial undertaking, and it can be an emotional experience as well. To help you maximize […]
Tax Free Savings Accounts (TFSA) are flexible, general-purpose savings vehicle that allows Canadians to earn tax-exempt income. The annual contribution limit is now $5,500 per year and you can withdraw […]
People with U.S. tax obligations have to file more than just their tax return with the Internal Revenue Service (IRS). U.S. citizens and green card holders are also required to […]