At the end of February, many Quebecers made their RRSP contributions at the last minute, then rushed to file their tax returns quickly in order to obtain their return as quickly as possible. However, such a strategy can lead to costly oversights and errors.
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“There are a lot of people who will make RRSP contributions at the last minute […] We are in a hurry, we are late to do our RRSPs, but we are in a hurry to do our taxes. We want our tax refunds, so we consolidate all of that and send it to our tax preparers, but the problem is that I may not have received everything, because the financial institutions have until May 1 to submit their receipt,” explains the financial planner at Jutras Asset Management, Jean-Sébastien Jutras.
- Listen to the personal finance discussion with Jean-Sébastien Jutras, financial planner at Jutras Gestion de Patrimoine, via QUB :
The latter says he observes several cases of taxpayers who file their tax returns without their RRSP contributions being taken into consideration.
“The problem is that my RRSP contribution will become sterile. When I contribute to my RRSP, I must deduct it or I can carry it forward to a future year, but for that, I must declare it […] So, this person who lost his RRSP will not be able to declare it, which will mean that he did not get his tax refund and when he gets it out again in 5, 10 , 15 or 20 years, it will be reimposed on it. He will pay tax twice on this same RRSP,” indicates Mr. Jutras.
Such a case happens more often than you think, says the financial planner.
“About one in four people find amounts in the last ten years that they forgot to deduct,” he maintains.
It is, however, possible to check whether our file contains such sterile contributions. On the show “À vosaffaires”, Jean-Sébastien Jutras showed a procedure for carrying out this check.
To see his explanations, watch the video above.