RRSP deduction question

[alberto]

I get the following msg in attachment..

 

What  does it mean? How can I see the recommend RRSP value to use?

 

Al

[TheTaxSmith]

Basically it means you have contributions to your RRSP that would possibly be better to carry forward to use in a subsequent year. The claim you are making on the Quebec return is not providing any deduction for you. You should look at optimizing the amount by limiting the current year RRSP claim. That said however you do not want to exceed more than $2,000 over your next year's limit. Also consider that RRSP claims affect the child benefits as well as any work income supplements so it is important to look at the result for those benefits.

[alberto]

I have 25K RRSP contribution, which I use all in 2021.

Federal owe 0

Provincial  owe $200

 

If I toggle RRSP to 24000

Federal owe $100

Provincial owe $400

So I'm not sure what is best or optimized?

 

alberto

 

 

I 

 

F 

[TheTaxSmith]

There is a difference between the amount owing/refundable and the taxes payable (lines 43500 and 450). Ideally you should always look at the Federal tax return line 43500 and Provincial tax return line 450. In many cases you want that to be zero, which however is not achievable for most people. RRSPs will lower the amounts on that line. So you need to compare the Federal amount payable as well as the Provincial amount payable and achieve the lowest total of those amounts. That involves playing with the RRSP limit to claim amount. But as mentioned earlier watch out for how that can affect child benefits and things like work supplements. From your comments above it appears the first option may be better.

[alberto]

That was my understanding as well the lowest possible amount owe to FED/QC is the best.

It's just strange that the UFILE message appears without providing a value or mechanism for toggling the RRSP deduction.

 

Thank you.