I have a client who overcontribute to his RRSP.
2020 unused contributions (7,061)
2021 T4RRSP 7,549
2021 RRSP contribution $9,696
2021 T4 has pension adjustment of $29,212
I am preparing a T746 for the unused contribution 7,061 and T4RSP.
Now $9,696 is over contributed for 2021. I will have to prepare T746 for 2022 tax return once the client withdraw the funds.
Am I on the right track.
Indy
You really need to talk to the client about stopping the RSP contributions…doesn’t sound as if he could have “reasonably expected” to deduct the excessive contributions made (again) in 2021?
I long since decided to dump clients who don’t “pay much attention”.
Not worth the hassle and they never want to pay the fees to fix, so I ended up eating time. Nope…not any more.
I am with you. It’s not worth it to keep clients who want to do it there way…
The client SHOULD NOT withdraw the funds - they need to have their RRSP provider complete T1-OVP so that it can come out tax free. They have not received the tax benefit of the contribution since it can’t be deducted. If they just withdraw it, it will be taxed again.
This is correct.
Once, way back at the dawn of time, when I worked with Revenue Canada -Taxation, we had a case come to Appeals where a person had deposited, withdrawn and moved and redeposited RRSP funds several times. By the time he was done, there was almost no money left. Someone finally appealed on his behalf and head office in Ottawa generously allowed the amount to be taxed only once…and refunded the remainder. But they didn’t need to do so…ah…clients who don’t listen.