When it comes to retirement planning, you may focus too much on how much money you’ll make from your various assets and forget about the taxes you’ll have to pay. There are a number of credits available to help you lower your tax burden when you start receiving your pension.

There are several other tactics to help you save money on your taxes, such as dividing your retirement pension income with your spouse or taking advantage of the claiming pension income tax credit. Tax Accountant Toronto team will help you plan for this and save thousands of dollars either way. Here are some basic tax suggestions for anybody hoping to retire.

Take Advantage Of Pension Income Tax Credit

The Minimum Income Guaranteed Credit is a tax credit available to those who have reached the age of 55. You may receive a tax credit of up to $20,000 if your income from a pension is lower. This can save you hundreds of dollars each year in taxes.

What’s Pension Income?

Tax accountant Toronto team state that pension income can be made in different ways including:

  • A registered retirement income fund, a pension fund, foreign pensions or superannuation
  • Annuities received from an RRSP or a deferred profit sharing plan

The best thing about the pension income tax credit is that it may be transferred to your spouse.

The Age Amount Tax Credit

The age amount tax credit is a government-sponsored incentive that allows people who are 65 years old or older at the end of their tax year to claim $1,000. Like other credits and deductions, the maximum amount that you may claim rises each year.

Tax accountant Toronto team affirms that the major goal of this tax credit is to help seniors reduce their taxes by allowing them to claim a deduction for their net income.

To be eligible, your net income must be lower than the maximum amount allowed. This implies that if your earnings are too high, you will not qualify for this tax credit.

Splitting Retirement Pension Income With Your Spouse

Tax accountant Toronto experts state that another tax-reducing option is to divide your earnings. This may be a significant benefit if one spouse makes a much higher salary and is therefore in a higher tax bracket than the other.

You can receive equal parts of the Canada pension plan benefits earned by dividing the cashflow. It might help you save hundreds of dollars in taxes. Both people must be 65 years of age or older to qualify.

The Registered Retirement Income Fund

When you turn 71, you have the choice to convert your RRSP into a RRIF. This fund enables seniors to withdraw their funds and live comfortably after retirement. You can no longer contribute to the pension plan once you make this conversion.

There may be various other methods to save money on taxes, depending on your individual circumstances. A tax accountant will examine your financial position and other variables like lifestyle before offering sound advice to reduce your tax bill.