# Should I put $$ in RRSP for bigger tax return?



## winnie1224 (Feb 22, 2011)

Hi Everyone,

Looking for some feedback and this site seemed excellent at giving advice. 

So I'll explain my situation:

I'm 28 yrs old and just completed my taxes. I will be getting a return without placing money into an RRSP. However, my net income is $65K+ which puts me in the next tax bracket for my provincial form. I was wondering should I invest some of the money in my savings in an RRSP in order to place me in a lower tax bracket, get more on my return and then put the return back into my savings? Or should I leave well enough alone.


Other details:
Own a home (making additional mortgage payments to pay it off in 10+ years)
Maxed out TSFAs
Participating in an indexed pension (Fed gov worker)
-Husband is breaking even on return and does not have indexed pension (regular pension plan however)

Hope some advice can be offered! Thanks in advance.


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## Rico (Jan 27, 2011)

Hello. How much contribution room do you have? How much savings are you thinking of using? I think buying the RRSP and investing your tax refund back into savings sounds reasonable.

Note: you don't really want your RRSP to put you INTO a lower tax bracket; you want it, at most, to take you to the bottom of your current bracket - if you go past that, you'll save at a lower marginal rate.


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## Jungle (Feb 17, 2010)

What province are you in?


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## Maybe Later (Feb 19, 2011)

You don't mention if your husband's marginal rate is higher or lower and whether he has any contribution room. If it is different (higher), you may see a benefit to having him make a spousal contribution. 

Even though it might be some time in the future, can you project what tax bracket your pension might put you into (assuming you stay with your current employer)? That might help your decision. Another consideration, depending on your field, might be whether or not you may leave the public service in the future and need to supplement your pension.


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## winnie1224 (Feb 22, 2011)

Newfoundland.


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## winnie1224 (Feb 22, 2011)

*More info*

Thanks so much so far for the replies... to fill in more info as has been asked:

Plenty of contribution room ($10K) (although, I don't have that much $$ to attribute right now.)

Only debts are my mortgage and car payment.

I am the higher-paid salary (only by 10K) and I plan to stay in the public service.

Husband has contribution room as well.

Thanks again.


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## Rico (Jan 27, 2011)

Your tax rate is 22% federal and 15.5% on the amount over $62,556 for provincial (NFLD).

You're at 65K - but I'm not sure what other deductions you have, etc.

What is your taxable income amount?

If it's over the 62556 then maybe buy an RRSP for a couple thousand to save at 37.5% combined fed/prov. (basically take yourself to the top of the provincial bracket).


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