Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

Tax issues for Americans with ties to Canada (& vice versa)

Posted By Jonathan Chevreau | March 3, 2015

By Brian Wruk, CFP

Special to the Financial Independence Hub

As the Canadian tax deadline quickly approaches, the process of gathering all your tax slips, back-up for your deductions and getting them to your accountant begins or, maybe you are installing the latest tax software. Regardless, if you are a Canadian with some form of tax ties to the U.S., you may need to file a U.S. tax return as well. What kind of ties?

Let’s go through three of the most common ones:

U. S. Citizenship – With all the media coverage, it is becoming common knowledge that being a U.S. citizen means you have to file a U.S. Form 1040 tax return. This is even more difficult to hide from the IRS since Canada signed an agreement that requires Canadian financial institutions to report all financial information tied to a “U.S. person.” This is all part of the IRS Foreign Account Tax Compliance Act (FATCA) initiative to crack down on U.S. citizens evading taxes through foreign accounts. Canadian financial institutions are reporting this information to Canada Revenue Agency, which in turn will provide that to the IRS as permitted by the Canada/U.S. Tax Treaty and the IRS will be looking for a tax return and the appropriate disclosures (FBARs).

Try to do a dry-run on your taxes today before RRSP contribution deadline passes

Posted By Jonathan Chevreau | March 2, 2015

By Jonathan Chevreau

As every red-blooded Canadian investor surely must know by now, today is the last day to make an RRSP contribution for the 2014 tax year.

As I wrote for Motley Fool Canada/MSN Money in two pieces in February (one on RRSPs, the other on the looming tax-filing deadline), today (or better yet the weekend just passed) would be a good time to at least do a preliminary dry run on your taxes.

Why? If you’re a salaried employee, you should by now have received your T-4 slip, which means if you enter the slip into your tax program, you’ll have a pretty good idea of how much tax you’ve already paid and how much you may yet need to pay.

T-4s are here; time to stop procrastinating

Sure, the filing deadline isn’t until Thursday, April 30th, roughly two months from now. But if you wait even until tomorrow, it will be too late to check out your past RRSP contributions Continue Reading…

Taking a long-term view of your finances

Posted By Jonathan Chevreau | February 26, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

I like to keep tabs on my finances for both the short and long term. A monthly spending summary is great for keeping track of where your paycheque goes, and an annual forecast works well for spotting trends and opportunities for your money.

But it’s also nice to gaze into the future. I want to know what my finances will look like in 20+ years so I use a spreadsheet to take a 50,000-foot view of my long-term finances.

Long-term financial outlook Continue Reading…

TFSAs benefit everyone, not just the so-called “rich”

Posted By Jonathan Chevreau | February 24, 2015

By Jonathan Chevreau

No surprise that the Broadbent Institute — a newish left-leaning think tank that counterbalances the rightish Fraser Institute — has concluded in its report Double Trouble that only the “rich” would benefit from the promised doubling of annual contribution limits for Tax-free Savings Accounts (TFSAs.)

You can read the Financial Post’s front page story by Garry Marr (aka @DustyWallet on Twitter) here and the Globe’s version here.

I was particularly interested in the CBC website’s coverage, and especially the almost 900 reader comments that have been piling on. For instance, one reader said:

What was the big surprise here? you need money to make it?

Or this:

The government doesn’t lose anything. The NDP lose votes. The TFSA is one of the few programs the average guy and gal can use. The NDP should be all over the TFSA and tell Canadians how they would make it better faster. This is really bad electioneering on their part. The NDP should be trying to convince the public TFSA were their idea.

5 reasons you could ignore the March 2nd RRSP deadline in favour of TFSAs

Posted By Jonathan Chevreau | February 24, 2015

By Ermos Erotocritou, CFP

Special to the Financial Independence Hub

With the deadline for Registered Retirement Savings Plans quickly approaching, thousands of Canadians will be getting out their cheque books to make their annual RRSP contributions. While saving for the future is always a good thing, the choice between RRSP or the Tax-Free Savings Account (TFSA) is not that simple.

Too many Canadians blindly make RRSP contributions without knowing if they will be better off in the future by making a TFSA contribution instead. Future RRSP withdrawals count as income and could increase your marginal tax rate whereas TFSA withdrawals do not count as income.

Here are five reasons why you should consider investing in your TFSA instead of your RRSP: Continue Reading…