3 questions as a new grad

[winterfreshgrin]

just started working in the last 1/3 of the 2007 year and now I'm paying "big people taxes"...
When I graduated, I did some temp work prior to my full-time job.

1) Am I supposed to receive a T4 slip from the temp agency - even when I worked a week and a half at my placement? They did take taxes from my pay cheque.
And if I don't get one, how am I supposed to claim back the taxes they took away from me? Is it sufficient to use my 2 pay stubs and add them up?

2) I have a leverage, meaning I have an investment loan used to fund my investments. I was wondering do I get a slip for the interest that I paid for the 2007 year and how do I about it using it as a tax deduction?

3) Since I worked full time for the last 1/3 of the year, I'm assuming it doesn't make sense of me to use my RRSP contributions to reduce my income (I also have untouched Edu. tax credits) for my 2007 taxes rather - use it towards my 2008 return seems more beneficial. Am I correct?


I look forward to your responses.

[asdfvcx]

1) Am I supposed to receive a T4 slip from the temp agency - even when I worked a week and a half at my placement? They did take taxes from my pay cheque.
And if I don't get one, how am I supposed to claim back the taxes they took away from me? Is it sufficient to use my 2 pay stubs and add them up?

Either the temp agency or the company who you worked should send you a T4 (depending on who was actually your legal employer.) It should be sent by the end of Feb. If you haven't received it by early March, give them call. And you probably want a real T4, not a guesstimate using pay stubs.

(Aside: who knew guesstimate would qualify as a real word according to Firefox's spell checker :cheesygri ... and yet Firefox's doesn't?)


2) I have a leverage, meaning I have an investment loan used to fund my investments. I was wondering do I get a slip for the interest that I paid for the 2007 year and how do I about it using it as a tax deduction?
There's a chance they might send you a report. But I'm not aware of any official tax receipt.


3) Since I worked full time for the last 1/3 of the year, I'm assuming it doesn't make sense of me to use my RRSP contributions to reduce my income (I also have untouched Edu. tax credits) for my 2007 taxes rather - use it towards my 2008 return seems more beneficial. Am I correct?
You probably don't want to use the RRSP deduction (although you still have to claim it). You don't have a choice as whether to use the Education deduction, you have to use it until you owe zero tax.

[jeeva86]

Will a report for the loan interest be enough for the CRA? e.g. for ppl who took advantage of MBNA 0%, I doubt that MBNA sends a tax receipt for this:cheesygri

[asdfvcx]

Will a report for the loan interest be enough for the CRA? e.g. for ppl who took advantage of MBNA 0%, I doubt that MBNA sends a tax receipt for this:cheesygri
Does CRA want you to include anything for an interest deduction? They may not want to see anything unless you're being audited, I'm not sure.

[jefguth]

3) Since I worked full time for the last 1/3 of the year, I'm assuming it doesn't make sense of me to use my RRSP contributions to reduce my income (I also have untouched Edu. tax credits) for my 2007 taxes rather - use it towards my 2008 return seems more beneficial. Am I correct?QUOTE]

You can make the RRSP contribution if you'd like now, and hold off on claiming it until a future year with greater income, and a higher marginal tax rate.
[QUOTE]
It's registered retirement savings plan season, and many Canadians will make a contribution to their RRSP before the Feb. 29 deadline. Good idea. But don't confuse the benefit of contributing to your RRSP with the benefit of claiming a deduction for that contribution. You see, you can contribute to your RRSP this year, but procrastinate on - or defer - claiming the deduction, or some part of it, to any future year.

Why do this? If claiming the deduction in a future year results in greater tax savings, then it could very well make sense. Here's the deal: The amount of tax you'll save from any deduction is equal to the amount you deduct, multiplied by your marginal tax rate. The lower your taxable income, the lower your marginal tax rate, and the lower your tax savings from claiming an RRSP deduction.

The bottom line?

It can make sense to claim enough of your RRSP deduction this year to bring your taxable income down to the next lowest tax bracket. But it may make sense to save the balance of your RRSP deduction until next year to claim it against higher-tax-rate dollars if possible. (http://www.theglobeandmail.com/servlet/story/LAC.20080131.RCESTNICK31/TPStory/TPBusiness/?query=)


You have to use the education credits until your taxes are reduced to zero, so no choice there.

[simms]

I'm in the same boat as you are. Contribute now and defer the RRSP contributions till 2008 (use a T1213 form to get the money back now).

The Education tax credits must be used NOW (eg: for the 2007 tax year). You CANNOT defer and you MUST use everything up.

[ghostryder]

2) I have a leverage, meaning I have an investment loan used to fund my investments. I was wondering do I get a slip for the interest that I paid for the 2007 year and how do I about it using it as a tax deduction?

I don't get any kind of slip for this, I just use my monthly statements and total up the interest for the year.

This amount goes on line 221-Carrying charges and interest expense.

http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/deductions/lines206-236/221/menu-e.html

[Just Confused]

I don't get any kind of slip for this, I just use my monthly statements and total up the interest for the year.

This amount goes on line 221-Carrying charges and interest expense.

http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/deductions/lines206-236/221/menu-e.html

I agree. I've been doing that for years and never had a problem.

As an FYI: You should try to keep your investment loans separate from other personal/revolving loans. Co-mingled usage would be difficult to calculate and likely get rejected in its entirety if you are audited.

[winterfreshgrin]

Thanks everyone for your feedback!
ironic part is that I received my T4 in the mail today - so I can cross that one off :cheesygri