What are you gonna do with your tax refund? What’s the “right” thing to do?

What are you gonna do with your tax refund?  What’s the “right” thing to do?

If there’s ONE thing I’m good at… it’s telling other people what to do with their money. So you’ve come to the right place!

There are SO many options. So let’s go over that FIRST and then I’ll spend your refund for you :)

Save.

This is something that is tough for most. When you see that you’re getting some money back, whether it’s $12 or $2,300 it’s likely money you haven’t depended on, so your life wouldn’t be much different if you squirrelled it away somewhere.

Spend it.

For some as soon as you see the amount you most likely have 2 thoughts 1. Thank goodness I don’t owe and 2. Now I can do <insert fun thing here>. Or Now I can get <that thing you’ve told yourself you can’t afford>

Pay off debt.

If getting your finances organized + in line are a priority for this year, one easy fix is to throw this new cash at debt. As an easy solution, if you have debt that carries an interest rate that is higher than 10% pick that one.

BUT - one solution I like is to do a little of everything. I like to take the balance, whether $12 or $1,200 and do a little of everything. Spend some. Save some. And throw the rest at debt. If you aren’t sure what % of each to do let me know in the comments and I’m happy to give you some direction. Or maybe you are in the OWING camp… I’ve got some tips for you coming up in a few days!! So stay tuned!!

There’s nothing more annoying that starting + stopping your tax return because you have forgotten (or are still waiting for) a document or slip.  Grab this checklist go to www.meghanchomut.com/taxes so that you can be sure you’ve gathered everything before you sit down and get started

Dubsado = Organization 101

When I first started my financial planning practice I knew I would need a tool to help me keep track of my client’s information, important notes and deadlines. Someone recommended Dubsado to me and I knew it was EXACTLY what I needed. But it’s that and SO MUCH MORE.

As I got more and more comfortable using the platform I realized that not only could I use it to stay organized in my consulting business, but it would be such an amazing tool to also help me with my investment properties.

WHY I LOVE IT

• It’s FREE for up to 3 “clients” aka tenants. So if you only have 1 tenant - it’s FREE TO YOU FOREVER!!

• I place a lot of value on the whole user experience. From ease of use to practicality. And I have to say the customer service is UNBEATABLE. They have thought of everything and have helpful guidance all over the place. From online chat, to hopping on a quick one-on-one call, to the extensive Help Centre full of tutorials and FAQs.

• Creativity or Boring. The whole interface can be as boring or as customized as you want it to be. Being in the financial services industry most of our software is booooooring and dare I say ugly. That’s what I loved about Dubsado. I could make it pretty. And add my personal touch to my client’s experience

• Everything is in one place. I’m not jumping all over the internet looking for #allthethings from phone numbers to emails to forms to documents to notes from meetings. I log into Dubsado, type in the tenants name and all the emails are there. All the lease agreements are there. All the receipts and income are documented. FINALLY something is actually easy

HOW I USE IT

1. Email correspondance: I correspond with my tenants via email. This allows ONE channel and avoids confusion. What I love about Dubsado is when I send a tenant an email, I can see that they’ve opened it. I don’t have to send a ‘send a read receipt’ it does this automatically

2. Bookkeeping: You can track all your bookkeeping. Expenses. Deposits. Future bills to consider. It’s all there. You are also able to send your tenant an invoice with the option to pay via credit card

3. Upload documents: All the corresponding documents can be uploaded and stored electronically for easy finding and HELLO CTRL+F #amiright ?!?

As I’m typing up this post I’m thinking of SO MANY more ways that Dubsado would be helpful in keeping you organized. What I will do is post some tutorial videos in my FB Group or YouTube channel to show you how I’m using it.

If this would be something you are interested in CLICK HERE to hop in the group and I’ll ‘see’ you in there

Dubsado also has a great incentive program that allows you to get 20% your first month if you are referred by a current Dubsado user (which I am) CLICK HERE to give it a test drive. Or use my coupon code meghancfp at checkout

🚨READER BEWARE 🚨

Here’s an uncomfortable truth nugget: Not everything you read on the internet is true and not all advice should be treated equally. 💣😳

I hop up on my soapbox about this A LOT. But no joke, there’s nothing that makes me more angry than people getting bad (or just plain wrong) advice online because some financial strategy has “worked” for them. Or because they are getting paid from a sponsored company #sponsoredad to put a spin on some #wordsofwisdom.

Whether you are trying to decide to make that RSP deposit before the deadline (which is MARCH 1, 2019), invest in an RSP or TFSA or make specific decisions in WHAT to actually invest in. PLEASE PLEASE PLEASE always read what you are googling with a grain of salt.

Ask QUESTIONS. Or flip the content you are reading to apply to your situation and see what sounds right. What sounds questionable. I’m just gonna throw this out there (but it’s absolutely NOT mandatory) - is the person you are getting advice from trained and educated in that field? Do they have a designation? Have they worked with ACTUAL humans? Or is the advice based on THEIR personal situation or research they’ve done on blogs and articles.

After working with 100s of families just like YOURS I created this GUIDE to help you with your Saving and Spending Goals. Go here and grab the workbook to get you started by the 3 easy steps to spend without guilt and save with confidence

CLICK HERE TO GRAB YOUR COPY

And please please please call me OUT if something looks confusing or wrong. Please ask questions. And reach out if there’s something that you feel doesn’t apply to YOUR specific situation.

Okay, hopping off my soapbox, for now

Why landlords should think twice about making large RSP deposits.

If tax efficiency and minimization is important to you.

Let’s go over a couple things.

For every dollar you deposit to an RSP you get money back either in the form of a larger refund or in a reduced balance owing. So some people want to know how much do you HAVE to contribute to their RSP to ensure they won’t owe. And this can be calculated using all your income, credits and deductions for the year.

When you earn rental income you have the opportunity to deduct expenses like repairs, utilities and interest. Another tool available to landlords to reduce their tax burden is something called CCA (or depreciation). It’s essentially an expense that you didn’t have to pay actual cash for, but is a deduction you can apply (until your rental income = $0) to account for the wear and tear of the property. You are eligible to claim anywhere from $0 to the maximum (which depends on your asset class). So if you (or your tax preparer) calculates that if you claim $2,000 in depreciation, you’d be able to move from owing taxes to a refund, that is an option for you. So this deduction HELPED YOU!

HOWEVER when you SELL your property - all the depreciation you’ve claimed over the years will come back into the equation. Let’s say you claimed $10,000 in depreciation over the last few years of owning your rental. Now you sell it. You will be paying tax on the total amount depreciation you’ve claimed over owning the property. It’s called recapture. And tax obligation this is IN ADDITION to the capital gains taxes you’ll be paying on the sale of the property.

If you sell your income property BEFORE age 71 this is where you’re gonna want to have some RSP room. When you receive the proceeds from the sale of your property you’ll benefit from a large RSP deposit to reduce your taxable income. Depending on the situation and how the asset is held, the year you sell the property will (hopefully) be big tax obligation year for you.

And if you don’t have the RSP room to be able to contribute, you know have one less strategy available to you to help you efficiently plan your tax strategy.

Tips like this + MUCH MORE go down in my FB Group!

CLICK HERE TO JOIN

Get a refund by making an RSP deposit

If I told you that depositing money to your RSP today would give you a tax refund in April… would you do it?

You’d probably want to know, HOW MUCH would the RSP deposit have to be? AND how big will the refund be? If you want to find out, keep reading

Easy answer is to take your tax rate and that’s the dollar amount you’ll get back. If you’re tax rate is 34% that means that for every dollar you put in an RSP you’ll get $0.34 back in refund. OH, you DON’T KNOW your tax rate. LOL Totally normal.

If you want to play around with the RSP deposit + your refund scenarios, grab some essentials. Your LAST paystub from 2018 along with any other income (like investment income) and deductions or credits you might be entitled to (like child care, RSPs you’ve already made, student loan, donactions). Head over to an online tax prep service or right over to the CRA site itself and plug in the numbers.

Keep in mind this is an approximation!

Without the extra RSP contribution are you getting a refund? Or do you owe? If you owe, what amount of RSPs do you have to deposit to NOT OWE TAXES? Let’s say without the RSP deposit you owe $1,600 and you figure out that you would have to deposit $2,900 to NOT owe. Is that worth it to you? It’s an extra $1,300 but you essentially get to KEEP it all. Instead of a whole $1,600 going right to the government you are making a $2,900 deposit for future you.

So that’s totally up to you.

One thing to keep in mind is that your RSP deposits you are making TODAY are #1 reducing your tax liability today, your savings are growing tax free BUT when you do take the money out of the RSP you will be taxed like on those withdrawals like they are income. So ideally you want to be strategic with the deposits as well as the withdrawals so that you are being tax efficient.

The best way to do your taxes is in one sitting. To help make sure you’ve got all the documents and papers you need to complete your return grab the checklist CLICK HERE TO GET YOURS