Last Call for 2023 2023 RRSP Contributions
Givens LLP | FEB 23 2023
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If you’re like most Canadians, you probably have a lot of things on your mind right now. The economy, the weather, the Oilers… but there’s one thing that you shouldn’t forget: the RRSP deadline.
The clock is ticking, and the deadline for contributing to your Registered Retirement Savings Plan (RRSP) for the 2023 tax year is February 29, 2024. That means you have less than two weeks to make a contribution and reduce your taxable income for 2023. So take this as your reminder not to let the deadline slip by because, let's face it, procrastination is the arch-nemesis of financial planning. Here's how to set yourself up for success when it comes to contributing to your RRSP for 2023.
Squeeze Into the Contribution Cap
First off, let's talk limits. For 2023, you're allowed to contribute up to 18% of your 2022 earned income, with a cap of $30,780. Don’t forget: if you have unused room from previous years, you can add that to your 2023 contributions. Your 2022 notice of assessment, which can also be found on your CRA My Account, is your go-to to check on exactly how much room you have to work with.
Tax Breaks: The Gift That Keeps on Giving
Contributing to your RRSP is like giving a gift to your future self while getting a present back in the form of tax breaks. Contributions can be deducted from your 2023 taxable income, reducing the amount of tax you owe and possibly leading to a refund. It's a financial win-win, where saving for your golden years could also mean saving on taxes now.
Plan Ahead For Next Year
Here’s a hot tip: prepare for your 2024 (and beyond!) RRSP contributions by starting now! Don't wait for the year to roll over again; take a proactive approach to your financial planning. If you know your income for the next year, you can make monthly contributions to your RRSP throughout the year instead of waiting until the last minute and then panicking when the next year’s deadline comes up. This proactive strategy not only ensures you're well-prepared but could also help you maximize your future tax deductions and grow your retirement nest egg more efficiently.
By understanding your tax bracket, you can strategize your contributions to maximize deductions, whether you choose to claim them now or save the deduction for a higher-tax year. So, whether you're a last-minute contributor or a forward-thinking planner, taking action now could pay off in tax savings and a more secure retirement.
Or you can spend your valuable time doing things that are more fun than taxes and leave the heavy lifting to us (honestly, taxes are fun for us). Contact our team today to get started.
