Filing a Tax Return Can Put Cash in Students Pockets
By · CommentsJamie Golombek, National Post Published: Friday, March 26, 2010
Until the end of April, Jamie Golombek will focus on tax filing tips for specific groups. This week, tax tips for students. Next week, tips for seniors.
With final exams just weeks away, it’s unlikely that filing an income tax return is at the top of most students’ minds. But students may find themselves with some extra cash this spring if they take the time to complete a return.
While there is generally no obligation to file a tax return if no taxes are owed, there are a few reasons why students should consider filing.
First, if they’re at least 19, students should file a return to establish their right to collect the GST/HST credit, which is a tax-free quarterly payment meant to assist individuals with low incomes to offset all or part of the GST/HST they pay. To receive the GST/HST credit, Canadians must apply for it each year, even if they received it last year. And to apply, they must file a tax return, even if they have no income to report. The application for the GST/HST credit can be found on Page 1 of the return. To estimate how much the credit may be worth to them, filers can go to the Canada Revenue Agency’s website and check out the Child and Family Benefits Online Calculator.
Another good reason to file a return is to get a refund of any tax withheld at source. If students had a part-time or summer job, chances are good their employer automatically withheld some income tax from their pay. Since most students are in a non-taxable position owing to the myriad credits available to students, filing a return to get back the amounts withheld at source may well be worth the effort.
As well, filing a return to report part-time or summer earnings will generate RRSP contribution room for use in future years. The RRSP contribution limit is based on 18% of earned income from the previous year. Since there is no limit to how much unused RRSP contribution room can be carried forward, filing a return now to report earned income will allow students to make more of an RRSP contribution later in life, when they’re in a higher tax bracket and the corresponding deduction is worth more.
Once students have made the decision to file, they should be sure to claim all available credits to reduce any tax owing to zero. They can start with the basic personal amount, available to every Canadian, which is $10,320 in 2009.
In addition, full-time students should be able to claim the education amount of $400 for each eligible month of attendance ($120 per month for part-time students). Those who can claim the education amount can also likely claim the relatively new textbook amount, equal to $65 for each eligible month ($20 per month for part-timers) in school.
Both tuition fees and interest on student loans may also be eligible for a credit.
And finally, students who take public transit to school should make sure to claim the transit credit.
Jamie.Golombek@cibc.com
• Jamie Golombek, CA, CPA, CFP, CLU, TEP is the managing director, tax and estate planning, with CIBC Private Wealth Management in Toronto.
How Can a Financial Advisor Help?
By · CommentsA Financial Advisor can help you:
- assess your current financial situation.
- create a realistic plan to meet your financial goals.
- understand how to meet your financial and retirement goals.
- put your financial plan into action and monitor your progress.
- update your financial plan to grow with your changing needs and goals.
If you have any of these questions or concerns, you will benefit from a consultation with a Financial Advisor:
- Confusion about conflicting financial advice and options.
- Paying too much income tax.
- Not saving enough for retirement.
- Not sure where to invest money.
- Changes in life that affect your financial future, such as a career change, marriage, retirement, loss of a spouse, birth of a child, etc.
- Not enough time to attend to personal financial affairs.
Financial Advisors are licensed professionals with a broad background in finance. They can guide you through some important life decisions. They can help you manage the risk involved in making decisions that can paralyze some of us, such as:
- What kind of retirement plan do I need?
- Am I paying too much in taxes?
- How can I save money for retirement – tax free?
- How much life insurance do I need?
- How can I make sure my estate is left to family members, and does not depleted by probate court and government taxes?
- Can we afford college tuition for our children – and how do we save for this, knowing how much tuitions are spiraling?
Would you benefit from having professional advice when it comes to planning your financial future? A Financial Advisor is a partner that can help you understand your options and help you build and protect your assets.
A Financial Advisor can also help you evaluate different life insurance plans and help you determine which policy or product is best going to serve your own unique needs and budget.
To assess your financial position and learn about some of the ways in which we can assist you, call us to schedule an appointment. Evening hours are available, and we can meet in your home or our office.
Question or concern about how a financial advisor can help?
Call: (403) 443-2110
Todd Darling, CFP, of Darling Financial Group serves the greater Three Hills, Alberta area.
Retirement & Estate Planning
By · CommentsHave you ever wondered whether you will be able to retire?
Do you know how long your retirement savings will last?
With the average life span increasing, many of us will have 30 years of retirement or more.
Statistics Canada reports: “Amid growing uncertainty about their future financial security, an increasing number of people do not know when they will retire. Others have simply delayed their retirement.”
• Are you prepared for retirement?
• Will your savings and retirement income be enough?
• What forms of income will you have?
• Do you know what your income needs will be at retirement?
It’s never too early to start planning for retirement.
A Financial Advisor can show you some of long term investment strategies and vehicles to help you meet your retirement savings goals, minimize your estate tax liability, and provide security for your spouse/family.
You should have an estate plan if:
1) you are the parent of minor children.
2) you have property (real estate) or a business.
3) you are concerned about health care treatment should you become disabled or terminally ill.
Estate planning includes more than just a simple Will. Estate planning also typically minimize potential taxes, and sets up a contingency plan to assure your preferences regarding health care treatment are followed.
Good estate planning identifies what will happen with your home, business, investments, business, life insurance, retirement plans, and other property when you become disabled or die.
A Financial Advisor will help you answer these questions:
Am I saving enough for my retirement?
How will inflation affect my retirement income?
I’m retired now, how long will my savings last?
How much retirement income will my RRSP provide?
What are the best retirement investment funds for me?
How much can I contribute to an RRSP?
What will my RRSP be worth at retirement?
What happens if I withdraw funds early from my RRSP?
I’m self-employed, how much can I contribute to a retirement plan?
How long will it take to double my money?
Taxable vs non-taxable savings comparisons
How should I allocate my assets?
How can I protect my assets from probate and estate taxes?
What is my potential estate tax liability?
Question or concern about Retirement & Estate Planning?
Call: (403) 443-2110
Todd Darling, CFP, of Darling Financial Group serves the greater Three Hills, Alberta area.
Home, College, Cash Flow
By · CommentsHow well are managing your personal finances? Do you find, like many people, that you just don’t spend enough time managing your money?
You may not achieve every financial goal or dream, but planning early can help you achieve some of them. People who have achieved financial freedom have identified their goals clearly and starting saving at an early age. While it’s never to late to start, the sooner you start saving the more time your money has to grow.
Financial Advisor can help you create a plan for managing your financial future, including:
Home – mortgage
Auto and large purchases – lease vs purchase
College savings plans
Credit – when should I use credit
Taxation
Insurance
Retirement Plans
A Financial Advisor can help you answer these questions:
Home / Mortgage / Auto
How much house can I afford?
Should I refinance my home mortgage?
Should I buy or rent a home?
Should I have a fixed-rate or adjustable-rate mortgage?
Should I buy my car or lease it?
Cash Flow
What is my net worth?
What is my project net worth?
What is my current cash flow?
How much am I spending?
Should I pay off my debt, or save more?
Credit
How long will it take to pay off my loan / credit cards?
Should I pay off my debt or invest the money?
Should I consolidate my personal debts?
What is the balance owed on my debt / loan?
How can I restructure my debts for fast payoff?
Insurance
How much life insurance do I need?
Do I need long-term care insurance?
What are the tax advantages of life insurance?
What are my chances of becoming disabled – and should I have disability insurance?
How can life insurance protect my assets?
College Savings
Even modest savings can provide a good start for college fees, if you start saving early. Investing just $100 a month for 18 years will yield $48,000 (assuming an 8 percent average annual return).
How much do I need to save for college tuitions?
What investment options are available for college savings?
How Much Life Insurance Do I Need?
By · CommentsThis question requires careful consideration. First, ask yourself:
“If I died tomorrow, how much money would my family need?”
Insurance reduces risk and provides security for yourself and your family’s future. To know how much insurance you need, you’ll need to consider your lifestyle and what the possible risks that could affect it. When calculating how much life insurance you need, consider the following:
Estate Expenses
Funeral Expenses
Mortgage
Loans and Debts
Replacing Annual Income (number of years?)
Children’s education
Resources available at death: Savings, Stocks, Mutual Funds, Retirement Funds, Life Insurance, and Other Assets
When you think of insurance, the first that comes to mind is auto and home insurance. Replacement of these assets in the event of damage can be very costly. Most people hold auto and home insurance policies.
Life insurance is essential to many families, giving extra security if the unthinkable should happen. The loss of a breadwinner is devastating enough, without having the added stress of worrying about how to cover the bills and mortgage.
Other types of insurance are equally important. Life events such as illness, accidental injury, loss of employment income, or a death in the family can affect family security. Yet these potential risks to your lifestyle can be reduced by the right insurance planning.
Changes in lifestyle also determine the types and amount of insurance you need. The amount of life insurance that you have will likely change throughout your life, depending on your life circumstances. Some of these changes might be getting married, starting a family, changing jobs or preparing for unexpected events.
Should you have Term, Universal Life, and Permanent Life Insurance? More information on the three types of insurance . . .
To meet modern trends, life insurance providers also offer to act as an investment vehicle, building up a sum of extra equity over the lifetime of the policy. This can be withdrawn or borrowed against, and usually offers a tax-free sum on retirement or death.
Deciding on an amount of life insurance you should have requires careful consideration. A Financial Advisor can help you determine just how much insurance you need based on your age, your income, family circumstances and obligations, assets owned, and debts owed.
Question or concern about how much you insurance you need?
Call: (403) 443-2110
Todd Darling, CFP, of Darling Financial Group serves the greater Three Hills, Alberta area.
Long Term Care Insurance
By · Comments“For a couple turning 65, there is a 70% chance that one of them will need long-term care.” – Wall Street Journal
“60% of people over 75 need long term care. The average facility stay for older folks is about 3 years.” – Business Week
“Over 50% of all people entering a care situation are penniless within one year.” – Harvard University
Long Term Care Insurance provides income should you end up requiring extended care. Long terms care typically includes rehabilitative care, nursing care, personal and in-home health care.
Long Term Care Insurance protects you in the event you have to enter a long term care facility. It can also help should you ever require at home health care assistance.
The most popular type of long term care policy is one that provides income to you to provide for any type of long term care service. Other types of policies reimburse you for eligible expenses or pay a set daily amount for expenses.
Question or concern about Long Term Care Insurance?
Call:(403) 443-2110
Todd Darling, CFP, of Darling Financial Group serves the greater Three Hills, Alberta area.
Critical Illness Insurance
By · Comments30% of adults will become critically ill before the age of 65. The Canadian Cancer Society reports that almost 40% of women, and almost 45% of men will develop cancer during their lifetimes. In Canada, more people will experience a critical illness before they reach 75, than will die before that age.
What would you do if you, or a family member became critically ill?
How would an illness affect your financial security?
Critical Illness Insurance helps ease the financial burdens caused by a serious illness. A Critical Illness Insurance Policy provides a lump sum cash payment to you upon diagnosis of a life threatening illness, such as heart attack, cancer, or stroke. Many policies make that payment 30 days after the diagnosis of certain specified life-threatening diseases such as cancer, stroke and heart attack.
With the lump sum payment from your policy, you can use the payment received from your policy in any way that you need to – for costs of care and treatment, home health care, debt payments, or replace income due to inability to work.
The Canadian Cancer Society reports:
Almost 40% of women, and almost 45% of men will develop cancer during their lifetimes.
Approximate 1 in 4 Canadians will die from cancer.
An estimated 166,400 new cases of cancer and 73,800 deaths from cancer will occur in Canada in 2008.
Three types of cancer account for the majority of new cases: in men: prostate, lung, colorectal; in women: breast, lung, colorectal.
30% of new cancer cases will occur in young and middle-aged adults ages 20-59 in their more productive stage of life.
The Heart and Stroke Foundation of Canada reports:
There are an estimated 70,000 heart attacks each year in Canada.
The leading cause of hospitalization in Canada is heart attack and stroke (15.4% of hospitalizations).
6.9 of Canadians between the ages of 50-64 are living with some form of heart disease or circulatory disease.
Approximately 19,000 Canadians die each year as the result of a heart attack. Most of these deaths occur out of hospital.
More than 50,000 strokes occur in Canada each year. That’s one stroke every 10 minutes.
For every 100,000 Canadian children under the age of 19, there are 6.7 strokes.
About 300,000 Canadians are living with the effects of stroke.
After age 55, the risk of stroke doubles every 10 years.
A stroke survivor has a 20% chance of having another stroke within 2 years.
Of every 100 people who have a stroke, 75 will survive and have long-lasting disability as a result.
Critical illness coverage typically includes (depending on the type of policy you purchase):
Cancer
Coronary Artery Bypass Surgery
Heart Attack
Kidney Failure
Major Organ Transplant
Prostate Cancer
Stroke
Other conditions* may be covered depending on the insurance company:
Alzheimer’s Dementia
Kidney Failure
Loss of Speech, Hearing, or Limb
Paralysis
Parkinson’s Disease
Multiple Sclerosis
* Conditions covered by Critical Illness Insurance, depend upon the type of policy you purchase.
Question or concern about Critical Illness Insurance?
Call: (403) 443-2110
Todd Darling, CFP, of Darling Financial Group serves the greater Three Hills, Alberta area.
Types of Life Insurance
By · CommentsBasically, there are three types of life insurance products that you need to know about:
Term, Permanent, and Universal Life Insurance.
Term life insurance
Term life insurance is the most traditional and best-known form of personal coverage, paying out to the policyholder’s dependents in the case of death. The main advantage of this insurance is that it is lower priced initially than other types of insurance, but it offers few other benefits.
This type of coverage typically operates for a fixed term of 10 to 30 years, depending upon the policy, and pays out the benefit amount if the policyholder dies.
Permanent Life Insurance
Permanent life insurance offers coverage for a lifetime, with a guaranteed payout upon death.
You choose the death benefit that will be paid upon death. You make payments in to the policy fund. So that any amount you pay into the fund on top of the premium is invested and building up a cash sum over time. This cash investment enables the value of the death benefit to increase, or allows loans to be taken against the policy, with many people seeing this as a viable income stream for their retirement plans.
Universal Life Insurance
Universal life insurance offers an extremely flexible middle way, combining life cover with the chance to build up an investment income, at a lower cost than fixed permanent life cover.
This type of cover can be very flexible and allows payments be varied, depending upon the current financial circumstances of the policyholder. Money paid over and above the normal premium can be used to either increase the cash value or increase the death benefit.
Summary
The three types of policies: TERM, UNIVERSAL, and PERMANENT insurance offer different benefits depending upon the needs of the policyholder.
The most affordable option, a simple Term policy, offers temporary coverage, but no other investment potential, and is usually a prerequisite when taking out a mortgage or a large loan.
Permanent and Universal Life Insurance are more flexible, offering tax-free investment potential alongside the lifetime coverage, allowing money to be invested into the death benefits or the investment account.
It is always important to seek independent financial advice before committing to any major financial decision and to be aware of all the long term investment opportunities available.
One of the easiest ways for you to make an informed decision before you buy life insurance is to sit down with a Financial Advisor to evaluate your situation. A Financial Advisor can help you determine the type of insurance coverage that is best for your unique situation.
Question or concern about Life Insurance?
Call: (403) 443-2110
Contact Darling Financial Group
Three Hills, Central and Southern Alberta, Canada
