Working 2 jobs what is the best thing to do come Tax Season 2008

[qman]

Hey Guys

Pretty Much I have been burned already this tax season :( im basically working 2 jobs at the momement one earning 45K+(fulltime) and another 20K+(part time) then give or take i get atleast 10K in bonuses from both job combined....

pretty much its RRSP but i dont know how much to buy, i really dont have that much on it since i just recently did the 2 job thing for 1.5year so no need for rrsps before...i dont own a house or anything live with my mom but i do have general bills(car and misc) hmm say $1000 a month.

And quitting 1 job is Easy but its not bothering me right now both are pretty chilling jobs, i mean i guess i know im going to pay up im just looking for either not paying any taxes(heres hoping) or pay as little as possible.

any inputs are appreciated suggestions etc. dont even have to be just RRSP's havent spoken to financial advisors as of yet just asking around friends who are financially smart

[Justin C]

Buy QuickTax 2007 (or whatever you prefer) when its available in December. Plug in your year-end numbers for both jobs and use the RRSP optimizer thing. You have until Mar 1 to make your RRSP constributions.

[Bullseye]

Doesn't need to be a 2007 version, really, 2006 is already out, and the numbers won't be THAT much different. It's just for estimating, anyways.

Project out your income, taxes, EI, CPP, to the end of the year (use pay stubs to do this). Plug these numbers into a tax program, see how you'll be likely to owe. Then you can make some decisions based on that.

[ruckus245]

Here are some suggestions:

1) Find out your RRSP limit for 2007 and max it out

2) If you can afford it, make charitable donations

3) If you can afford it, take some classes that you wanted to take

4) Put aside some money because, from past experience, you might be owing income tax instead of getting a refund. Income tax deducted from a $45000 job and a $20000 job plus bonuses does not equal income tax deducted from a $75000 job.

[Khrak]

Here are some suggestions:

1) Find out your RRSP limit for 2007 and max it out

2) If you can afford it, make charitable donations

3) If you can afford it, take some classes that you wanted to take

4) Put aside some money because, from past experience, you might be owing income tax instead of getting a refund. Income tax deducted from a $45000 job and a $20000 job plus bonuses does not equal income tax deducted from a $75000 job.


Nor does $20,000 + $45,000 = $75,000 :lol: (Sorry, had to.)

[nejo]

he said plus bonuses i.e. 20+45+10 so it does = $75 ... sorry had to (hehe)

[CSK'sMom]

Nor does $20,000 + $45,000 = $75,000 :lol: (Sorry, had to.)


Too bad your reading comprehension isn't quite up to snuff Khrak. The OP stated there is also $10k in bonuses between both jobs. :rolleyes:

$20k + $45k + $10k does indeed equal $75k...

[pogs]

Since you are living at home...stuff as much as you can afford into you RRSP's. That will decrease the amount of taxable income. Also, if you are planning on buying a home in the next couple of years, you could take advantage of the home buyers plan...using up to 20 G's of your RRSP towards your first home purchase.

Think of RRSP's or a mortgage as forced savings.

pogs :cheesygri

[TrevorK]

Hey Guys

Pretty Much I have been burned already this tax season :( im basically working 2 jobs at the momement one earning 45K+(fulltime) and another 20K+(part time) then give or take i get atleast 10K in bonuses from both job combined....

pretty much its RRSP but i dont know how much to buy, i really dont have that much on it since i just recently did the 2 job thing for 1.5year so no need for rrsps before...i dont own a house or anything live with my mom but i do have general bills(car and misc) hmm say $1000 a month.

And quitting 1 job is Easy but its not bothering me right now both are pretty chilling jobs, i mean i guess i know im going to pay up im just looking for either not paying any taxes(heres hoping) or pay as little as possible.

any inputs are appreciated suggestions etc. dont even have to be just RRSP's havent spoken to financial advisors as of yet just asking around friends who are financially smart

Welcome to the world of working your ass off - I've been doing 2 jobs for years now and dealing with issuing 5 figure cheques to the government every tax season.

You can estimate you taxes with a calculator such as this:
http://www.walterharder.ca/T1.html

The amounts may be off slightly (different tax years), but it's good enough to get you a really good estimate. This calculator will allow you to view the affect your income has on tax/cpp/ei and how your investments (dividend, cap gain, rrsp contributions, etc...) affect the tax you pay. It's free, all online, and works great.


For someone in your position RRSPs may be a very good idea. If your income level now is higher than it will be in the forseeable future (So after you quit a job) it may be to your benefit to contribute to your RRSPs. It would all depend on what tax bracket you hit, and the calculator above can let you see the different scenarios. The RRSPs will also allow you to use some for the Home Buyer's Plan, which it sounds like you'll eventually need.


My personal advice is to try and stick to investments that are also tax-efficient. This may result in you investing heavily in Canadian-dividend stocks for instance, which have very favourable tax treatment (Just an example) or sticking to RRSPs.

You will need to sit down (Either with a financial planner or armed with the knowledge you've gained) and decide things such as:
- Risk tolerance
- Goal for the money
- etc....

And then using those answers, you can determine what to do (IE: RRSP vs Non-Registered, Mutual vs Stocks, etc....). There is no solution that applies to everyone when it comes to investing, it has to be personalized for you.

[huthut]

With your pt job, you're paying about 10% in taxes. So each tax time, the gov't will want the other 20% from that (bonus included). RRSP's is the way to go since you a get about 30% back from it. You can also give charitable donations (They don't help much unless it's a big amount). You can also have your pt job increase the taxes they take off each paycheck. You can pay it off throughout the year instead of each tax period.

[grant]

You can also give charitable donations (They don't help much unless it's a big amount).
So you donate $100 to charity and get $30 reduction in taxes?

That may be admirable, but it's not fiscally smart.

[Kranberry]

1) Find out your RRSP limit for 2007 and max it out


This may or may not be true. Depending on other deductions and what not. For example, student who has been working and in post secondary may have some RRSP limits. He then graduates and get's a job, but his tuiton deductions is enough to cover ALL his taxes. If he were to buy RRSP at this point, he'd waste his tax deductions on them as they were not needed. Albeit most people this would be a good idea, but I wouldn't make it a hard fast rule.

[qman]

Ohh thanks man..yeah hmm i do have stocks they are from my PT job since the company gives me 50% on top of my original set contribution and the other job i have Bonds(Money Market but i dont know still new at bonds/stocks etc)...

Welcome to the world of working your ass off - I've been doing 2 jobs for years now and dealing with issuing 5 figure cheques to the government every tax season.

You can estimate you taxes with a calculator such as this:
http://www.walterharder.ca/T1.html

The amounts may be off slightly (different tax years), but it's good enough to get you a really good estimate. This calculator will allow you to view the affect your income has on tax/cpp/ei and how your investments (dividend, cap gain, rrsp contributions, etc...) affect the tax you pay. It's free, all online, and works great.


For someone in your position RRSPs may be a very good idea. If your income level now is higher than it will be in the forseeable future (So after you quit a job) it may be to your benefit to contribute to your RRSPs. It would all depend on what tax bracket you hit, and the calculator above can let you see the different scenarios. The RRSPs will also allow you to use some for the Home Buyer's Plan, which it sounds like you'll eventually need.


My personal advice is to try and stick to investments that are also tax-efficient. This may result in you investing heavily in Canadian-dividend stocks for instance, which have very favourable tax treatment (Just an example) or sticking to RRSPs.

You will need to sit down (Either with a financial planner or armed with the knowledge you've gained) and decide things such as:
- Risk tolerance
- Goal for the money
- etc....

And then using those answers, you can determine what to do (IE: RRSP vs Non-Registered, Mutual vs Stocks, etc....). There is no solution that applies to everyone when it comes to investing, it has to be personalized for you.

[qman]

Yeah pretty much thats one of the things im looking at since i do want to invest on a condo or house to rent out...but maybe thats in a year or two....

Since you are living at home...stuff as much as you can afford into you RRSP's. That will decrease the amount of taxable income. Also, if you are planning on buying a home in the next couple of years, you could take advantage of the home buyers plan...using up to 20 G's of your RRSP towards your first home purchase.

Think of RRSP's or a mortgage as forced savings.

pogs :cheesygri

[qman]

IF i have my PT job do this how much usually(approx) will the hit be? and i guess this could technically give me a refund when tax season comes by?

This sounds ok but i guess may not be my first choice i guess cause from what i see still end up paying the queen already lol unless i'm missing something here...

With your pt job, you're paying about 10% in taxes. So each tax time, the gov't will want the other 20% from that (bonus included). RRSP's is the way to go since you a get about 30% back from it. You can also give charitable donations (They don't help much unless it's a big amount). You can also have your pt job increase the taxes they take off each paycheck. You can pay it off throughout the year instead of each tax period.

[qman]

haha yeah i give to charity now and then but mostly its for good KARMA :) .... its basically small amounts

So you donate $100 to charity and get $30 reduction in taxes?

That may be admirable, but it's not fiscally smart.

[huthut]

So you donate $100 to charity and get $30 reduction in taxes?

That may be admirable, but it's not fiscally smart.

That's why RRSP's is the way to go. Not only do you get the tax benefit, it's also an investment. People even take out loans just to purchase them.

[CSIFan29]

Can you open an RRSP and not claim it until a future year? For example, open one this year and not claim it until my text year's taxes (due April 2009)?

[grant]

Can you open an RRSP and not claim it until a future year? For example, open one this year and not claim it until my text year's taxes (due April 2009)?
yes

[aksher]

Welcome to the world of working your ass off - I've been doing 2 jobs for years now and dealing with issuing 5 figure cheques to the government every tax season.

You can estimate you taxes with a calculator such as this:
http://www.walterharder.ca/T1.html

The amounts may be off slightly (different tax years), but it's good enough to get you a really good estimate. This calculator will allow you to view the affect your income has on tax/cpp/ei and how your investments (dividend, cap gain, rrsp contributions, etc...) affect the tax you pay. It's free, all online, and works great.


For someone in your position RRSPs may be a very good idea. If your income level now is higher than it will be in the forseeable future (So after you quit a job) it may be to your benefit to contribute to your RRSPs. It would all depend on what tax bracket you hit, and the calculator above can let you see the different scenarios. The RRSPs will also allow you to use some for the Home Buyer's Plan, which it sounds like you'll eventually need.


My personal advice is to try and stick to investments that are also tax-efficient. This may result in you investing heavily in Canadian-dividend stocks for instance, which have very favourable tax treatment (Just an example) or sticking to RRSPs.

You will need to sit down (Either with a financial planner or armed with the knowledge you've gained) and decide things such as:
- Risk tolerance
- Goal for the money
- etc....

And then using those answers, you can determine what to do (IE: RRSP vs Non-Registered, Mutual vs Stocks, etc....). There is no solution that applies to everyone when it comes to investing, it has to be personalized for you.

With regards to investment choices, one should also keep in mind that tax considerations should not dictate what you choose to invest in. You mention that due to the favourable treatment of Canadian dividends, one might invest heavily in Cdn dividend stocks, which have certainly performed well in the recent years, but the bull Canadian market probably has to end some time, (? last week is indicator of rougher times ahead for Cdn equity). Most of what I've been reading is suggesting to look at diversifying more outside of Canada at this point in time (which is also facilitated by the removal of foreign content restrictions in RRSPs).

[Thalo]

With regards to investment choices, one should also keep in mind that tax considerations should not dictate what you choose to invest in. You mention that due to the favourable treatment of Canadian dividends, one might invest heavily in Cdn dividend stocks, which have certainly performed well in the recent years, but the bull Canadian market probably has to end some time, (? last week is indicator of rougher times ahead for Cdn equity). Most of what I've been reading is suggesting to look at diversifying more outside of Canada at this point in time (which is also facilitated by the removal of foreign content restrictions in RRSPs).

In regards to this, first pick the right allocation among asset classes (equity/bond/safety) and region (Canada/US/International) based on your risk threshold and investment timeframe. Then rebalance to go slightly overweight in some areas, underweight in others based on general predictions of where the economy is headed (ie: right now you want to be underweight Canada and maybe a bit overweight bonds, as they're at a discount). Then figure out how to best position the investments for tax efficiency: what goes in the RSP and what stays out. Ideally all bonds and global equity (dividends taxed like interest) should be inside the RSP, all Canadian equity outside, but this might not always fit. You might have an overflow of global equity that needs to be kept outside the RSP or not enough global equity and bonds to fill the RSP, that you need to put some Canadian in there too.