Personal Finance

How To Fix Errors On Old Tax Return Plus Claim Your Kids Deduction

Thanks to commenter David on my recent QuickTax software review, I learned that you can claim your kids and I now need to refile my tax returns for the last two years.  It is on the federal TD1 form and is plain as day (now that I look at it). So much for saving money by doing my taxes myself!  Mr. Cheap has asked me a few times if I’ve even considered going to an accountant and I now realize that he wasn’t asking so much as he was suggesting.  🙂

The good news is that I researched how to make corrections on tax returns that you’ve already filed and it looks to be very easy.  Here is the T1 form you need to fill out.  Basically all you have to do is fill out the line number you are changing, the old value, the new value and that’s it.  CRA will recalculate your tax return.

As for the child tax credit you get a $2,000 deduction amount per child starting in 2007.  This amount goes up each year and was $2,089 for 2009 tax year.  It applies to kids who are under 18 at the end of the tax year.

In my case I had 1 kid during the 2007 tax year and then 2 kids for both the 2008 and 2009 tax years.  Please note that I’m counting my kids for multiple tax years – I don’t have 5 kids!  I believe this works out to a bit more than $300 per kid per year which means that I will get back $300 for the 2007 return, $600 for the 2008 return.  A good payoff for a fairly small amount of fixing.

I had researched writing off dependents before but I had only found this article about dependents which clearly doesn’t cover my situation and made me think that you couldn’t claim your kids.

If you live in the United States and are looking for the relevant information then check out this article called Amended tax return.

How about you guys?  Did anyone else cheat on their old returns and need to correct them?

Real Estate

Dealing With Real Estate Agents And Other Real Estate Resources

My parents (Hi Mom and Dad!) are planning to buy a new house in the near future after living in their current house for 40 years.  Right now they are in the process of figuring out how to get a real estate agent.  Unfortunately I can’t be of much help to them since I don’t live in the same city but I did offer to share all my writings on real estate agents.  The following is a list of posts we’ve done on real estate and agents with a brief description of each.

The next series of posts were written by a first-time home buyer who explains all the various steps she went through:

That’s it!  Good luck with the house hunting!


Will There Be A Second Stimulus Check In 2009?

The question all Americans want to know is whether they will receive a late Christmas present this year in the form of a 2nd economic stimulus check.

In 2008 the government sent out economic stimulus checks to 130 million Americans with the idea that this money would be spent on consumer goods and services thereby stimulating the economy. While the program was considered a success by some – it didn’t prevent the economy from slowing down into a recession with the possibility of a depression.

President-elect Obama has proposed an economic stimulus package for 2009 which will total almost 1 trillion dollars – or about $3300 for every single American.

Second economic stimulus check

So far there has been no mention of any stimulus checks (like in 2008) however that doesn’t mean it won’t happen. Nothing has been approved or finalized so it is still possible. If a second economic stimulus check is going to happen in 2009 it would be more likely to appear later in the year if it looks like the initial stimulus efforts are not doing enough to get the economy going.

Stimulus tax cuts

Obama has proposed stimulus tax cuts of $1,000 for couples and $500 for individuals. If this passes, it might be the closest thing to an actual stimulus check that most Americans will receive in 2009. This kind of stimulus is not as much fun as getting a large check all at once since it would take the form of reduced withholding taxes on regular paychecks. However, in the end – extra money is extra money.

Emergency Energy rebate

One of the more controversial initiatives is an energy relief plan to help Americans pay their energy bills this winter. The $1,000 emergency energy rebate would be given directly to Americans and would be paid for by windfall profit taxes on the large oil companies.
This particular initiative might not have much of a chance given that with the rapidly dropping price of oil, home heating costs are going to be a lot lower than initially predicted as recently as a couple of months ago.

Infrastructure stimulus spending

The Obama stimulus plan is calling for a huge investment in roads and bridges and mass transit improvements. This will total $850 billion over 2 years. This portion of the plan is the main driver behind the goal to create 2.5 million jobs over 2 years.

$250 stimulus check for select groups

There will be a $250 stimulus check for select groups.


How To Legally Pay *NO* Income Tax

Every year around tax time people get grumpy about shelling out cash to support the government. It always depresses me when people want more and more services out of the government, but don’t connect these services with their high tax bills (I like to call these people “Canadians”). Luckily there’s an easy method to reduce your income tax bill to nothing.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Before getting into the how, a consideration is should you do this. Taxes pay for communal services such as hospitals, roads and schools that people are quite happy to take advantage of (and often happy to pay for). In the movie “Stranger than Fiction” Will Farrell plays an IRS auditor who is investigating Maggie Gyllenhaal because she deducts the money that would have gone to the military from her tax payment. Unfortunately we don’t have à la carte taxation, you pay your share of EVERYTHING or you go to jail.

Tax protesters are kooks who mistakenly believe they’ve found a legal loop-hole to avoid paying taxes, withhold paying taxes, then get thrown in jail. I definitely don’t recommend anything along those lines. Wesley Snipes got himself into trouble by falling in with some of these characters.  Luckily he’s half-vampire, so no one will mess with him in jail.

So, to get back to the title of this post, the easy way to pay no provincial or federal income taxes is just to earn less money than the minimum which is taxed in your country. In Canada, this would be about $9,850 (for someone living in Ontario according to, or $820 / month. Certainly you won’t be living like a king, but I think it’d be possible to live on this. You’ll have to calculate the maximum earnings for countries outside of Canada, but it’ll probably be a similar amount.

One man who’s living this lifestyle is Don Schrader. He felt strongly enough about not wanting to finance military conflict, that he has restricted his earning below an amount which would cause him to pay federal income tax (and lives the lifestyle this allows). He also drinks urine, so he might not be the ideal role model, but he does prove it’s possible.


When Will You Get Your Early Economic Stimulus Rebate Check?

“When will I get my economic stimulus rebate check?” is one of the big questions that Americans are asking themselves at the moment. Actually I’ve been asking that question as well but I’m not holding my breath for it!

The economic stimulus checks started on April 28 and will continue through to mid-July of 2008.

The schedule for people who filed their taxes by April 15 is based on the last 2 digits of their SSN – Social Security number. If you filed jointly then the payments will go out based on the person listed first on the return.


Last two SSN digits: Payments will be transmitted no later than:
00 through 20 May 2
21 through 75 May 9
76 through 99 May 16


Last two SSN digits: Payments will be mailed no later than:
00 through 09 May 16
10 through 18 May 23
19 through 25 May 30
26 through 38 June 6
39 through 51 June 13
52 through 63 June 20
64 through 75 June 27
76 through 87 July 4
88 through 99 July 11

If you couldn’t get your act together to file your taxes by April 15 (but you did file since then right?) then you will get your rebate about 2 weeks after the scheduled date. You need to file your taxes by October 15 in order to get a rebate this year.

Here is the IRS online calculator to figure out how much your rebate will be.

If you are confused about whether this rebate is actually a loan then this post should clear things up.

Personal Finance

Tax Free Savings Account (TFSA)

The Canadian government recently announced a new type of tax-free savings account (TFSA) available to Canadians which is similar to the Roth IRA account available to Americans. Here are some of the details:

What is the TFSA?

A type of account where you make contributions but don’t get any income tax refund. While the money is in the account there are no taxes applied to any kind of earnings such as interest, dividends, capitals gains. Any withdrawals from the account are not taxable and won’t count against any government programs ie GIS, OAS.

How does the TFSA work?

  • You can contribute $5000 per year to this account for the years 2009 to 2012 and $5,500 for year 2013 and beyond.
  • The contribution room is carried forward.
  • No taxes on any earnings.
  • No taxes on any withdrawals.
  • When you withdraw money from the account, the contribution room available gets increased by the amount of the withdrawal – please note that this new contribution room is not available until the following calendar year.

When can I open up a TFSA account?

January 2, 2009 was the first day you could deposit funds into a TFSA.  Most institutions allowed customers to set up accounts prior to this date however.

Why do I want to open a TFSA account?

Any money that you might be saving for emergencies or upcoming large purchases will have a constant tax drag in an non-registered account. With the TFSA, this tax drag no longer exists so you will end up with more money for your purchase or emergency.  Here are some more benefits of the Canadian tax free savings account.

More information on the TFSA

Tax Free Savings Account (TFSA) Basic information for Canadians

TFSA contribution limits

TFSA Over-Contribution Penalty Fix

Tax Free Savings Account refresher for Canada

ING offers TFSA refresher for Canadians

Using the Tax Free Savings Account (TFSA) for Canadians as an emergency fund