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Big Refunds are not good strategy


Big Refunds Are Not Good Tax Planning 

When I see anyone get a "fairly large" tax refund, it reminds me that this is not the sort of thing a person would allow if he/she was concerned about "good financial planning." If you are getting a big refund, it means that the government has had your money as a loan from you, and they are not paying you any interest on that loan. If you had to pay when you filed your return, it indicates that you have had their money on an interest-free loan.
That's good for you! Anytime you want to lend me money, interest-free, I'll grab it and laugh all the way to the Bank!
If you are going to get a large refund next time, you could rearrange your affairs to get that refund up front, with every paycheque. You could then use the money sooner to pay bills which are costing you interest, or put money into your RRSP sooner with great benefits later. "Say you pay $356 every other week on a 6%, $10,000 mortgage amortized over 20 years.
Your current payments will retire that debt in just over 17 years at a total interest cost to you of $59,676. If you boost your payment by $200 in extra take-home pay, you'll be mortgage-free eight years sooner and save nearly $31,000 of interest."
A large refund could result from such situations as the following; maybe you: claimed a spouse who had little or no income claimed the Northern Residents' Deduction had large RRSP contributions made child support payments (more on this later) paid large medical bills had employment expenses claimed "Equivalent to Married" (single parents) had Tuition Fees and/or Education Amount, or transferred such from a child had losses carried forward from prior years are paying union dues yourself as opposed to having them deducted from your salary claimed child care expenses claimed attendant care expenses had moving expenses are paying interest on an investment loan ("carrying charges") are repaying EI or other social benefits are entitled to the overseas employment tax credit made significant charitable donations. Some of these can be handled by preparing a new TD-1 form at your employer's payroll department.
For the others, you could write to CRA to indicate that the tax being withheld from your salary is too much and is causing hardship.
You could ask them to provide your employer with a letter authorizing the employer to reduce your tax deductions each payday. This letter expires at the end of the calendar year, so for next year you would have to write another.
Check to see if you qualify for the Caregiver Credit.
Consult with a Tax Advisor for more information.