Use payroll deductions to save money

“If you will have excess tax deductions or non-refundable tax credits in 2009, request reductions in your payroll income-tax withholdings early in 2009,” says Chartered Accountant Ruby Lim, Senior Manager at PricewaterhouseCoopers LLP in Toronto. Employees claiming tax deductions or non-refundable tax credits (that will result in a refund of income tax) can complete Form T1213 to request reduced payroll tax deductions. This may apply to employees claiming deductions for registered retirement savings plan (RRSP) contributions, childcare expenses, support payments, employment expenses and/or carrying charges and interest expense on investment loans. It may also apply to employees with non-refundable credits for charitable donations and tuition fees. “Alternatively, employees with non-employment income can request to increase the amount of payroll income tax withheld. This will avoid tax owing for the year that may trigger interest expense and/or penalties,” advises Lim. Brought to you by the Institute of Chartered Accountants of Ontario.