Tax benefits from RRSP also favour the rich

A recent study by the Canadian Centre for Policy Alternatives says 86 per cent of Canadian families would get absolutely no benefit from a proposed Conservative government income splitting plan.

It argues allowing higher-income family members to transfer part of their income to family members in lower tax brackets will only benefit a few wealthy families. At the same time, they say the nearly $5 billion in lost government revenue annually resulting from the plan will be compensated by the many.
While it’s a fact of life that tax breaks favour those who pay the most in taxes, if the CCPA is looking for a tax plan that benefits the rich they don’t need to go any further than the cherished registered retirement savings plan (RRSP).
Here’s what they would find: According to Statistics Canada the average Canadian annual pre-tax income is about $40,000. For the sake of argument, let’s say that average person scrimped and saved, and contributed $10,000 to his RRSP. Using tax tables provided by the Canada Revenue Agency, if he lived in Ontario he would roughly be in a 20 per cent tax bracket. That means he would avoid paying $2,000 in taxes.
Now, let’s say his rich uncle who made $140,000 also contributed $10,000 to an RRSP account. In Ontario he would roughly be in 39 per cent tax bracket – reaping a tax savings of $3,900.
That’s not the only advantage the rich uncle has over his poor nephew. If the uncle plays it smart and limits his overall contributions until he retires he can restrict the amount of money he withdraws from his RRSP to a lower tax bracket. The nephew, on the other hand, will likely withdraw his savings in retirement at the same contribution rate.
TFSA: the great equalizer
The tax free savings account, on the other hand, is more democratic – to a point. Any gains on investment returns in a TFSA are not taxed regardless of your income.
However, in the future it will become more of a benefit to the rich as the contribution limit keeps rising. When it was introduced six years ago the limit was $5,000 but each year that limit is increased by the federal government. Right now Canadians are allowed to have as much as $31,000 total in their TFSAs, if they have never contributed before.
As the contribution limit grows, TFSAs will be a bigger drain on government coffers and those who can afford to put the most in their TFSAs will benefit the most.
When RRSPs and TFSAs are not enough
There are investment tax perks outside of the RRSP and TFSA. Gains on equities like stocks are only taxed at 50 per cent. If you lose money on some equities you can offset those losses against other gains.
Dividends from eligible Canadian companies are also subject to a tax credit.
But with so many RRSPs and TFSAs being underutilized you really have to wonder who really needs additional tax perks and why is a Federal government that claims to be committed to balancing the budget so eager to please them by allowing income splitting.
The maximum RRSP deduction for the 2013 tax year is $23,820 plus any unused contribution space from previous years. Add that to the $5,500 annual TFSA contribution limit and that’s close to $30,000 a year in tax perks.
A recent Sun Life Financial/Ipsos Reid poll found only 36 per cent of eligible Canadians even make contributions to their RRSPs. Another recent Bank of Montreal survey found the average RRSP contribution last year was only $4,670.
Recent statistics on TFSAs are hard to come by but the Federal government recently estimated only half of eligible Canadians even have a TFSA.
It seems that rich uncle has Ottawa’s ear.

Tax Benefits of Car Donation

If you donate a car to charity and itemize deductions on your income tax return, it may be possible to claim a deduction for your car donation.

In 2005, the IRS changed the laws related to tax deductibility of car donations because of exaggerated deductions based on inflated book values (book values tend to become less reliable as a vehicle ages). Under the new rules, the deductible amount of your vehicle donation is directly related to the selling price of your vehicle.

Donate a car and if it sells for less than $500 you can take a tax deduction equal to the 'fair market value' of your donation up to $500. Fair Market Value is loosely explained as the "Blue Book" or "Guide Book" value of your vehicle. See our car donation to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.

The charity you donate a car to is required by IRS to send to the donor a contemporaneous written acknowledgement (receipt) within 30 days of the vehicle sale. This receipt must include the following:

The gross selling price of the vehicle (if sold for greater than $500)
Year, Make, Model and VIN Information
A statement that the vehicle was sold at arm's length between two unrelated parties
And a statement that no goods or services were received in return for your contribution.*
*Keep in mind that companies that promise goods or services in return for your car donation are legally cutting into the amount that you can claim for a tax deduction for your charitable contribution.

TIPS TO MAXIMIZE YOUR CAR DONATION TAX DEDUCTION
Car Donation Wizard wants donors to know that donating a car to charity not only helps the organization fund worthwhile research and activities, but you also may be eligible to claim a tax deduction for your charitable contribution. Here are some car donation tax tips:

Make sure the charity is eligible to receive tax deductible contributions. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. Visit IRS.gov to search for registered charities. Car Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
Be sure that you get a receipt from the charity for your car donation. You must obtain a written acknowledgment from the charity if the total deduction you are claiming for a donated car is $250 or more. Car Donation Wizard mails a tax receipt for your records following the sale of your vehicle.
The IRS will only allow a deduction for the fair market value of the car. This can be found on the tax receipt mailed to you for your donation.
If the car is worth more than $500, the donor must complete Section A of IRS Form 8283 and attach it to their tax return.
If the car is worth $5,000 or more, an independent appraisal is necessary. The donor must also fill out Section B of IRS Form 8283. Take pictures of the car and save receipts for new tires or other upgrades to verify its value.
Always consult your tax adviser or the IRS for more information about how you can claim charitable deductions. The IRS can answer your tax questions and can provide tax forms, publications, and other reading materials for further assistance. IRS materials are accessible through the Internet at www.irs.gov, through telephone ordering at (800) 829-3676, and at IRS walk-in offices in many areas across the country.

DONATE A CAR IN CALIFORNIA CHARITY

Below we\'ve listed over two hundred of the related  charities which will receive automotive donations in California. Before you decide on the charity for your California automotive donation please browse through our commonly asked queries or search our charity information for different choices. gift to Charity is that the best option for vehicle donations in California, having been established in North California and supported California charities from its origination.

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We square measure a trusty name in automotive donations and still serve several charities in Northern California, la, city and across the nice state of California and beyond! gift your automotive to a CA charity or gift a automotive to at least one of our national charity partners.

Simple select a charity and once you square measure able to gift USAe our convenient on-line automotive donation kind or decision us fee at (866) 392-4483 to gift your automotive over the phone.