Success Story of The Accounting and Tax
In this blog we will discuss about one of the success stories of The Accounting and Tax..
We were approached by a client from the U.S who has been working on TN visa for past few years. He has been filing his U.S taxes for all these years. He also files his taxes as resident of Canada since he has significant ties with Canada. His family is in Canada, principal residence is in Canada and he also has his RRSP, some investments, credit cards and bank account in Canada.
He also has a home buyer’s plan where he is supposed to make a yearly adjustment of $1900 per year. He had been contributing over $10,000 each year to RRSP thinking that he was bringing his tax liability down.
His question was to understand exact amount of RRSP contribution required to bring him in lowest tax bracket.
We started working on his taxes from 2012 onward and noticed that after adjusting his foreign tax credits, he only required $2500 per year for RRSP contribution. We also noticed that his accountant was not optimizing his foreign tax credits. His accountant was only considering federal taxes he paid in the U.S. In addition to federal taxes he paid, we used his State taxes amount, Social security tax withheld and Medicare tax withheld to optimize his foreign tax credits. This took care of his HBP plan adjustment and his tax liability worked out to be zero for each year.
Adjustments for all these years were made with CRA and balance RRSP from each year was carried forward. He has enough cushion for many future years and need not contribute till all this cushion is exhausted.
For more updates on Taxation in Canada, Tax laws and tips please contact The Accounting and Tax.
‘The Accounting & Tax’ has been providing professional tax, audit, and accounting solutions to individuals and corporate clients since 2001.
Our company specializes in providing tax preparation for Canada and U.S.A. We at ‘The Accounting and Tax’ are dedicated to serve small businesses in Accounting, Bookkeeping, Payroll, Financial Statements, HST Filing, WSIB Filing, Business Registrations, and Taxation (Personal, Small Business or Corporations – Canada & U.S.A).
