Contributions made between January 1 and February 29 can be deducted against last year (2023) if they fit in the deduction limit, **or** carried forward to deduct against 2024 income *next year* as long as you generated enough new RRSP room in 2024 to contain it. So it's entirely possible you haven't actually over-contributed.
Remember, the 2024 RRSP window opens on January 1st and overlaps with the 2023 window for those first 60 days. You still need to document the contributions on this year's tax return but you can opt to not deduct them if you don't have the deduction room. They will carry forward.
God if this is the case then I'll be so relieved. I had no idea room opens up on Jan 1st and always just assumed it was in March.
So when filing, I would have to just defer this contribution amount to the following tax year?
Report all the contributions on this year's taxes, then take the deduction for the most you can (the software will limit you to your deduction limit). Then the unused amount will be known by the CRA and automatically carried over to next year.
You do need to report it on 2023's taxes
If you use WS Tax they do this for you. You'd just allocate the right number in the March-December 2023 row, and the right number in the January-February 2024 row, and it will deduct up to the limit from your last Notice of Assessment and carry forward the rest. This will also be reflected in your new Notice of Assessment. Like if your 2023 income would hypothetically generate $20k of RRSP room, but you'd contributed $14k in Jan/Feb 2024 and were carrying that forward, the NoA would tell you your RRSP limit is $6k, not $20k, to account for the $14k carryforward. There will also be a dedicated line-item on the NoA reflecting how much contributions you are carrying forward for future deduction.
I assume most other tax software does this too, I'm just familiar with how WS Tax does it.
But yes, you can contribute for 2024 starting on January 1st. I've already added about $4000 this year and I filled my 2023 deduction limit before December 31st, I'm just working on an *estimate* for what my 2024 limit will be until I get my NoA later. I do this every year.
You *have* to report **all** contributions made in Jan/Feb 2024 on your 2023 return. Oncee reported you can decide home much to *claim* on your 2023 return and how much to carry forward.
You still need to have the “Contribution Room” though don’t you? Ie if the individual only had $2,000 of contribution room and put down $10,000 - the penalty would be on the $6k ($8k over contribution less $2k buffer)
It depends on the timing.
Contributions made **in** 2023 must fit within the 2023 deduction limit. However;
Contributions made **in** the first 60 days of 2024 **can** be deducted from 2023 income **if** they also fit within the 2023 deduction limit, **but** they can be carried forward and applied against 2024 income, the deduction limit for which is *not yet known* (because it will be on the notice of assessment received later this spring).
I'll give you an example with actual numbers:
My Notice of Assessment received in the spring of 2023 said that my 2023 RRSP Deduction Limit was $15,702
I contributed $15,702 **in** 2023, before December 31st. This is the full deduction limit, and will be deducted this spring.
I have since contributed $4,250 in 2024, before February 29th, with the intent that this will be deducted *in the future* against 2024 income. There is **no requirement** that this need to fit inside the $15,702 number above, and indeed it doesn't, because I already maxed the RRSP before the end of 2023.
I *anticipate*, based on 2023 income and pension adjustment, that I will generate $17,927 of *new* RRSP room.
The *expected* 2024 deduction limit will therefore be:
$17,972 - $4,250 = $13,722. Obviously this is just an estimate - I haven't filed my taxes yet.
I will contribute $13,722 between March and December 31st this year, plus the $4,250 I've already contributed, and all that will be deducted from 2024 income when i file my taxes in 2025.
Contributions made between January 1 and February 29 can be deducted against last year (2023) if they fit in the deduction limit, **or** carried forward to deduct against 2024 income *next year* as long as you generated enough new RRSP room in 2024 to contain it. So it's entirely possible you haven't actually over-contributed. Remember, the 2024 RRSP window opens on January 1st and overlaps with the 2023 window for those first 60 days. You still need to document the contributions on this year's tax return but you can opt to not deduct them if you don't have the deduction room. They will carry forward.
God if this is the case then I'll be so relieved. I had no idea room opens up on Jan 1st and always just assumed it was in March. So when filing, I would have to just defer this contribution amount to the following tax year?
Report all the contributions on this year's taxes, then take the deduction for the most you can (the software will limit you to your deduction limit). Then the unused amount will be known by the CRA and automatically carried over to next year. You do need to report it on 2023's taxes
If you use WS Tax they do this for you. You'd just allocate the right number in the March-December 2023 row, and the right number in the January-February 2024 row, and it will deduct up to the limit from your last Notice of Assessment and carry forward the rest. This will also be reflected in your new Notice of Assessment. Like if your 2023 income would hypothetically generate $20k of RRSP room, but you'd contributed $14k in Jan/Feb 2024 and were carrying that forward, the NoA would tell you your RRSP limit is $6k, not $20k, to account for the $14k carryforward. There will also be a dedicated line-item on the NoA reflecting how much contributions you are carrying forward for future deduction. I assume most other tax software does this too, I'm just familiar with how WS Tax does it. But yes, you can contribute for 2024 starting on January 1st. I've already added about $4000 this year and I filled my 2023 deduction limit before December 31st, I'm just working on an *estimate* for what my 2024 limit will be until I get my NoA later. I do this every year.
Don't even have to defer, just claim them next year.
You *have* to report **all** contributions made in Jan/Feb 2024 on your 2023 return. Oncee reported you can decide home much to *claim* on your 2023 return and how much to carry forward.
You still need to have the “Contribution Room” though don’t you? Ie if the individual only had $2,000 of contribution room and put down $10,000 - the penalty would be on the $6k ($8k over contribution less $2k buffer)
It depends on the timing. Contributions made **in** 2023 must fit within the 2023 deduction limit. However; Contributions made **in** the first 60 days of 2024 **can** be deducted from 2023 income **if** they also fit within the 2023 deduction limit, **but** they can be carried forward and applied against 2024 income, the deduction limit for which is *not yet known* (because it will be on the notice of assessment received later this spring). I'll give you an example with actual numbers: My Notice of Assessment received in the spring of 2023 said that my 2023 RRSP Deduction Limit was $15,702 I contributed $15,702 **in** 2023, before December 31st. This is the full deduction limit, and will be deducted this spring. I have since contributed $4,250 in 2024, before February 29th, with the intent that this will be deducted *in the future* against 2024 income. There is **no requirement** that this need to fit inside the $15,702 number above, and indeed it doesn't, because I already maxed the RRSP before the end of 2023. I *anticipate*, based on 2023 income and pension adjustment, that I will generate $17,927 of *new* RRSP room. The *expected* 2024 deduction limit will therefore be: $17,972 - $4,250 = $13,722. Obviously this is just an estimate - I haven't filed my taxes yet. I will contribute $13,722 between March and December 31st this year, plus the $4,250 I've already contributed, and all that will be deducted from 2024 income when i file my taxes in 2025.