Income Tax Tips for Canadian Taxpayers

 There are no "tricks" to getting your biggest income tax refund. The reality is that you'll only get back money for deductions you qualify for. ...That means that you should do your best over the course of each tax year to spend money in ways that you can later claim.

A great, common way to get a big refund is to put money into an RRSP. Here are some tips:

• Contribute to your RRSP before the deadline of March 1, 2010
• Don't borrow money to make an RRSP contribution as the interest on that loan is not tax deductible
• Work with a financial advisor to invest your RRSPs so they grow

Refer to your Notice of Assessment to see what the maximum amount is that you can contribute to your RRSP. You may not need to contribute your maximum amount to get a great refund.

Use the TurboTax RRSP Calculator to determine what to contribute

Read more easy tax tips from TurboTax
 

If you're earning money from a pension (like CPP) or your partner is, you may want to split that pension income between the two of you. For example, if one partner has gone into semi-retirement (and started receiving pension from her former employer) but is also working as a consultant, and the other partner is still working but earning less money, this couple could portion up to 50% of the pension income to the lower-earning spouse.

The result is a reduction in net income and taxable income for the higher-paid spouse... which translates to tax savings.

TurboTax Premier has the Pension Income Splitting Optimizer built in

Sure, the first thing a lot of us want to do when we get a tax refund is spend it. But, when you think about it, the money you get back isn't found money - it's not like winning a little lottery. It's actually money you earned over the course of the year... and you've finally got it back in your pocket.

If you think of your tax refund that way, you may want to spend it differently. Have you considered a Tax Free Savings Account (TFSA)? Here are a few of the benefits of putting your refund into a TFSA:

• Pay no taxes on your contributions... so you basically get tax-free earnings
• Pay no taxes on your withdrawals (unlike RRSP withdrawals, which are taxed)
• Contribute up to $5000 every year
• Contribute easily - whenever you'd like, with contribution room carried forward

You could use your TFSA as an emergency fund or to help you save for a large purchase, like a house down payment.

Learn more about the TFSA