Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Returning Member
posted Apr 24, 2020 7:52:45 PM

Severance and RRSP

Hello folks!

I need help:

- i lost my job in November 2019
- i was offered a 5 month severance pay
- the lump sum was transferred directly to my RRSP in January 2020, upon request (therefore, the gross amount, without withholding taxes).

 

My questions are as follows:
- should i be getting a contribution slip for this amount (for the period of first 60 days of 2020)?
- if so, can i include this in my 2019 income tax return and expect a substantial deduction?
- is it safe to say that the lump sum will appear as income in my 2020 T4?

cheers

 

0 1 371
1 Replies
Intuit Alumni
Apr 28, 2020 6:56:45 AM

This severance package was part of your income in your 2029 T4 slip since it was paid in a lump sum and commonly reported in:

  • Box 14
  • Box 66 or,
  • Box 67

Since you have contributed the amount in your RRSP the first 60 days of 2020 > you will be able to deduct it in your 2019 tax return. The financial institution should have issued you a slip for this contribution.

 

If it is reported in Box 66 > you can do a direct transfer to your RRSP without reducing your RRSP contribution limit. You will need a letter from the employer to prove that it was a direct transfer.

If it was reported in any other Box > you must have enough room in your RRSP to contribute this amount. > it will reduce your RRSP limit 

The amount contributed will be deducted from your income on Line 208 and you will end up paying less taxes for 2019. 

 

I hope this was helpful