233 What to Know About Filing this 2020 Tax Season - Gerry Vittoratos, UFile Tax Specialist
More Money Podcast - Un podcast de Jessica Moorhouse - Les mercredis
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Gerry Vittoratos has been working for Thomson Reuters for over 10 years as a trainer and tax support resource person. In his capacity as head trainer, Gerry has been providing training sessions to tax professionals all over Canada. He has also made several radio and TV appearances on BNN and Global TV as the UFile tax specialist discussing a multitude of tax topics. Here are some of the things we talked about in this episode. Tax Brackets, Average Tax Rate & Marginal Tax Rate. We talked at length about tax brackets and how in Canada we have a progressive tax system. That means that you pay different tax rates on different portions of your income. Your average tax rate is the amount of tax you pay divided by your income. Average Tax Rate = Total Tax / Total Income Your marginal tax rate is the amount of tax you would pay on your next dollar of income. With that said, your average tax rate is what you need to know because it will show you how much money you have to pay the government in taxes. To help, check out UFile’s Income Tax Calculator. Refundable & Non-Refundable Tax Credits: both are still good, but ultimately refundable tax credits are the best kind because you can a tax refund if you use it. For non-refundable tax credits, they only decrease the amount of tax you owe. If you owe $300 in taxes and your non-refundable tax credit is for $500, you won’t get $200 refunded to you. Your taxes owed would simply become $0. For more information, check out the CRA’s page on non-refundable and refundable tax credits. There are a ton of tax credits you can take advantage of, and when you use a tax software like UFile, it will help you find out which ones you qualify for. If your investments are in a TFSA and/or RRSP, then you don’t have to pay any taxes on any investment income you earn from interest, dividends or capital gains. But, if your investments are in a taxable (unregistered) account, then you will have to pay taxes. For any interest you earn (GICs, savings accounts, bonds…), those amounts are taxed at your marginal tax rate. For any Canadian dividends you earn, you may be eligible for the Canadian dividend tax credit which will lower your tax rate on that income. For any capital gains you earn (the profit you earn when you sell stocks or equity mutual funds or ETFs), only 50% of those capital gains are taxable. That means you get to keep 50% of that profit and not pay tax on it, and the remainder is taxed at your marginal tax rate. For full episode show notes visit https://jessicamoorhouse.com/233 Learn more about your ad choices. Visit megaphone.fm/adchoices