Forced to pay installments despite net refund as a couple | Page 3 | Income tax filing | Discussion forum

AltaRed said
I see your decision as two separate things. You contribute to a RRSP because you want too, not because it could zero out the need to make installment payments. That latter point is a minor bonus from my perspective.

There is nothing inherently wrong in making installment payments other than the nuisance of doing so on a quarterly basis.  

@AltaRed:
Actually, right now I am thinking of contributing to RRSP NOT because I want to, but to zero out zero out the need to make installment payments.
Other reasons:
1. No other avenues left for putting that money in. After having exhausted all options, why not put in an RRSP. There is a limit on how much you can put in an RRSP.
2. I can defer tax, for now, and gives me some time to think.
3. As I have read here, one can plan for exhausting RRSP first whenever you can.
Not sure if I can think of any other reason.

Another advantage of TFSA deposits is that one can withdraw and then recontribute in the next year if you have a cash crunch. Do that with an RRSP and you pay tax twice on the same cash!

It's also good advice to delay RRSP deposits if one is in a very low tax bracket, as with young people just starting out. You can carry your RRSP deposits forward for years and then make the deposit when in a high tax bracket.

Watch out for withholding tax on deregistered RRSP cash! Take it out at the end of the year if possible, and file to recover it as soon as possible in the new year. We used to be able to do RRSP withdrawals in chunks under $3k to minimize withholding, but I think they've covered that now.

@mordko.

What u said is very true.

Technically if one is wealthy enuf at 65 years old that income triggers OAS clawback, one should not "care" about OAS to begin with. But I never agree with OAS clawback in the first place, if one is high income, the OAS will get taxed at high tax bracket too, but not 100% which is what clawback does.

And if one is truly wealthy, one would just top up both RRSP and TFSA to the max already anyway.

Which is why I said "CRA will get u now or later", be it TFSA or RRSP 🙁

True. What mordko said about making a contribution in one year but taking the deduction later is a good idea, too, though you need to be able to do without the cash in the meantime.