Quote:
Originally Posted by BigNumbers
Are you preparing your own taxes? If so, I'd get help from Locke.
The bonus should be on the T4. There is no such thing as being pushed "up a tax bracket" and under-taxed (see: marginal tax rates) - unless her employer doesn't use payroll software like ADP, etc, but in this day and age I wouldn't think that's the case. All payroll software looks at every marginal new dollar paid and taxes it appropriately (subject to your personal situation, etc).
The obvious non-professional answer here is you're not making the offsetting RRSP contribution deduction you should, if indeed you put it in an RRSP.
If you just said "put it in an RRSP" and they paid it to your bank account like a normal bonus, you're likely SOL for this year. If it is sitting in an RRSP account in cash or something in a brokerage account, then you need to make the RRSP deduction.
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I appreciate the vote!
Quote:
Originally Posted by Cappy
1) no, we have accountants. We use different accountants though (last time this year)
2) Thats not what i meant. but they were bigger bonuses so would have made her income extend into another bracket where that amount would have been taxed higher (i know how tax brackets work)
3) This is what i thought maybe happened? i have not yet seen her T1
4) not what happened. Was paid directly in.
As i admit above, i have not seen the her T1 and the amount isn't huge which made me think her end of year bonuses just got taxed at the higher bracket than the software taxed her at - the extra 1-3% on 5 figures could produce that.
In terms of a T4, do contributions to RRSP show up in employment income or under another line item?
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Okay, there are actually a number of different ways this could have gone. I dont mean to be disparaging but it can be difficult to ascertain the circumstances based on message board information.
In general with bonuses though, one is usually given a number of different ways to receive it and how it is accounted for.
Often though the bonus is paid out and a corresponding RRSP slip is issued. Income in and then directly out. They balance each other.
If! If thats the directed method. There are many others as well.
And again, not to be disparaging because you seem like you know your stuff, but I can empathize with some of the Accountants on here, you probably dont realize how many people do not understand how Tax Brackets work.
Again though, as Accountants, we kind of hedge our bets on that topic. We get that one a lot.