Taking the time now to consider personal tax implications and laying down a financial foundation for the coming year can go a long way to setting yourself up for success down the road.
A good way to begin is by taking stock of the past year.
Has your debt situation improved over the past year?
If it hasn't, then now is the time to do something about it — set those automatic payments higher, for example, so that at the end of the year you will be able to say, 'Yes, my debt situation has improved.'
That might include taking a spending holiday by holding off on purchases or not buying any clothes for an extended period or not dining out as often.
Setting monthly goals can help to whittle down personal debt to achieve an improved financial picture by the end of the year.
The RRSP contribution deadline is March 2, 2020 and the tax filing deadline is April 30, 2020. The trick is not to wait until the last minute. Lawyers should start considering their options now and reach out to their advisors while they still have plenty of time.
You want to avoid making rushed decisions because the March deadline is approaching. Take a weekend beforehand, look at your income statement and the RRSP assessment from last year, and use an online RRSP calculator. And then make an informed decision about your contribution.
RRSPs are one of the best tax savings vehicles you can find. Depending upon your tax bracket, you can save up to 40 per cent on taxes. What that means is that a $1,000 contribution could provide up to a $400 return in tax savings or a tax refund. So sometimes it makes sense to take a loan to get an RRSP.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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