- Written by Steph
This is not going to be an exciting post, so here’s an exciting photo:
Parachuting off Grouse Mountain a few years ago. Fun!
Taxes are always a popular topic in the personal finance world, especially in the early retirement community. As it’s officially tax time, here’s a brief and extremely boring overview of how we manage the whole thing, and how we plan to manage it in the future. It’s brief because we do next to nothing, and boring because it’s stuff everyone already knows about. But here goes!
First, we use every penny of tax sheltering space available to us – i.e. we both max out our RRSPs and TFSAs every year. People spend a lot of time thinking “Which one do I pick?”, when the correct answer is generally “Both, and then open a taxable account and fill that up too!”.
Second, we invest in a way that’s reasonably tax efficient – using a robo-advisor service that doesn’t do anything crazy with our money. Investing can rack up quite the tax bill depending how you manage it, so we carefully consider the tax implications of any investments we’re considering.
Third, I file our taxes by myself ever year. Our situation is simple enough that it’s pretty easy to self-manage – we have employment income, investment income, and RRSP contributions. It was initially a bit of a headache figuring out how to enter some of the investment information on the taxable accounts, but it’s not bad now.
Though it’s a few years in the future still, we have some vague plans for post-FIRE tax planning. With our expenses being as low as they are, our withdrawals will be low enough (about 10K each per year) that our tax bill should be quite reasonable without having to do much in particular, and we will definitely keep moving money into our TFSAs every year.
And that’s about it. We’re looking forward to filing our 2016 taxes as soon as we get that one last T3 slip!