Take a few minutes now to make sure you have considered most or all of the following items to maximize your tax savings this year.
1) Pay these expenses before the calendar year-end for this year’s qualifying tax deductions and credits:
– medical expenses;
– transit passes;
– spousal support;
– childcare costs;
– child fitness program costs;
– child arts program costs;
– tuition fees;
– safety deposit box rental fees;
– investment counsel/management fees;
– interest expenses;
– professional dues;
– charitable and political donations
2) Review your investment portfolio and make appropriate financial transactions:
Selling investments outside your registered accounts may trigger capital gains or losses. It may be to your advantage to do so before the year-end. You can report a capital gain in a low or no income year, or to capture capital losses to offset capital gains already realized during the year. For securities transaction to settle by year-end, Canadian transactions must be placed by December 24th this year and consult your broker for US and other foreign transaction deadlines.
3) Contribute to an RESP for your child or grandchild:
Your RESP contribution must be made before December 31st to qualify for this year’s Canada Education Savings Grant. The grant can add as much as $500 this year to your RESP, and annual grant of as much as $1,000 for prior non-contributory years. Check with your financial advisor or institution for details.
4) Contribute to a TFSA:
A maximum of $5,500 can be made to your and your spouse’s tax free savings accounts for this year. There’s also an opportunity to catch up to an additional $20,000 if you haven’t maximized your contributions in previous years. This is a great opportunity to shelter income on these contributions from income taxes.
5) Contribute to an RRSP:
Deadline for RRSP contributions for 2013 is March 3rd, 2014. However, if you are turning 71 this year, you can make one last contribution by December 31st. Consider making an extra contribution before the year end if you have earned income this year. You will be subject to a 1% per month penalty on the over-contribution amount for one month. However the tax savings from the contribution can more than offset this penalty. Check with your financial advisor to determine if this is beneficial in your tax situation.