Severance

[PattiAnn1970]

If a severance package was transferred directly to an RRSP that had ample contribution room, and the severance amount is not indicated on anywhere on T4 (not in line 14, 66 or 67), can you claim this as a RRSP contribution?  Or how do you claim the RRSP?  I had to show proof of contribution limit to my employer in order for them to transfer directly to the RRSP, if that makes any difference.

[Antomeister]

According to the Canada Revenue Agency (CRA), you must report severance pay as taxable income, if you are receiving it into a bank account. Since it is being directly transferred to your RRSP, it is instead a RRSP contribution and must be reported as such. The CRA treats it this way because if you do choose to withdraw it from your RRSP account in the future, it will be reported as taxable income. To claim your contribution on TurboTax Online:

> Sign into TurboTax Online, choose your return

> On the magnifying glass that says "Find" (On the top-right), search RRSP and click on "RRSP Profile"

> Since you've stated that there is no line on your T4,  you will check the first box "Made RRSP Contributions during 2021"

> Here you will then input your deduction limit stated on your 2020 Notice of Assessment.

> On the next page you will input your total severance transferred and deposited into your RRSP.

Make sure to hit "Done" when complete so that your information is saved.

For more information, check out: CRA - Severance Pay

Thank you for choosing TurboTax.

[Antomeister]

According to the Canada Revenue Agency (CRA), you must report severance pay as taxable income, if you are receiving it into a bank account. Since it is being directly transferred to your RRSP, it is instead a RRSP contribution and must be reported as such. The CRA treats it this way because if you do choose to withdraw it from your RRSP account in the future, it will be reported as taxable income. To claim your contribution on TurboTax Online:

> Sign into TurboTax Online, choose your return

> On the magnifying glass that says "Find" (On the top-right), search RRSP and click on "RRSP Profile"

> Since you've stated that there is no line on your T4,  you will check the first box "Made RRSP Contributions during 2021"

> Here you will then input your deduction limit stated on your 2020 Notice of Assessment.

> On the next page you will input your total severance transferred and deposited into your RRSP.

Make sure to hit "Done" when complete so that your information is saved.

For more information, check out: CRA - Severance Pay

Thank you for choosing TurboTax.