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Income tax on resident salary?


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I was just wondering whether the salaries listed on the CARMs website for resident income are subject to income tax. There is an area where "provincial dues" which confused me but then it's stated as "gross salary" so I assume the same rules apply and the provincial dues are in addition to any income tax.

 

http://www.carms.ca/eng/r1_program_salaries_e.shtml

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I was just wondering whether the salaries listed on the CARMs website for resident income are subject to income tax. There is an area where "provincial dues" which confused me but then it's stated as "gross salary" so I assume the same rules apply and the provincial dues are in addition to any income tax.

 

http://www.carms.ca/eng/r1_program_salaries_e.shtml

 

yup, dare I say of course :) There is nothing special about resident salary, it i just like any other job in Canada and there is income tax on it as a result.

 

Now there is one wrinkle - you would have A LOT of tax credits by the time you start residency from your tuition so that definitely removes the tax burden for the first bit anyway - almost 2 years - so for FM residents then it is almost tax free.

 

You can pretty much consider yourself unionized and those dues are a union fees.

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yup, dare I say of course :) There is nothing special about resident salary, it i just like any other job in Canada and there is income tax on it as a result.

 

Now there is one wrinkle - you would have A LOT of tax credits by the time you start residency from your tuition so that definitely removes the tax burden for the first bit anyway - almost 2 years - so for FM residents then it is almost tax free.

 

You can pretty much consider yourself unionized and those dues are a union fees.

 

What do you mean by tax credits built up? Sorry I don't really know anything about this.

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What do you mean by tax credits built up? Sorry I don't really know anything about this.

 

Tuition tax credits can be carried forward if you can't use them during your schooling years (or can't use them to their maximum benefit.) I believe they can also be transferred to a spouse, which I'll be doing. In addition, there are the RRSP contribution amounts, something I imagine would be something that non-trads would be more likely to take advantage of, but which can represent significant tax savings.

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Tuition tax credits can be carried forward if you can't use them during your schooling years (or can't use them to their maximum benefit.) I believe they can also be transferred to a spouse, which I'll be doing. In addition, there are the RRSP contribution amounts, something I imagine would be something that non-trads would be more likely to take advantage of, but which can represent significant tax savings.

 

I was advised that we can only transfer $5k per year with no roll-over, meaning if you get say $20k for your first year of med, you can transfer $5k and you must keep the rest for yourself, you can't give them a portion of the remaining $15k next year. I could be wrong - this was H&R block who are hit and miss.

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I was advised that we can only transfer $5k per year with no roll-over, meaning if you get say $20k for your first year of med, you can transfer $5k and you must keep the rest for yourself, you can't give them a portion of the remaining $15k next year. I could be wrong - this was H&R block who are hit and miss.

 

Ill look into that. We're planning to transfer as we go, pretty much. My husband's marginal tax rate is around 30% (even wih the DTC for our son) so we were hoping to use my undergrad tuition to lessen that a bit since I don't work. He'll be earning far less once I'm in med school as he'll be leaving this job for one that allows him to take on primary child care responsibilities, which is why we don't want to hold onto those undergrad credits.

 

Thanks for letting me know.

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Ill look into that. We're planning to transfer as we go, pretty much. My husband's marginal tax rate is around 30% (even wih the DTC for our son) so we were hoping to use my undergrad tuition to lessen that a bit since I don't work. He'll be earning far less once I'm in med school as he'll be leaving this job for one that allows him to take on primary child care responsibilities, which is why we don't want to hold onto those undergrad credits.

 

Thanks for letting me know.

 

No prob - depending on his job too he might be able to transfer some tax burden to you as you'll have a ton of unused credit throughout school. That's awesome that you guys are making it work like that! Much respect :)

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No prob - depending on his job too he might be able to transfer some tax burden to you as you'll have a ton of unused credit throughout school. That's awesome that you guys are making it work like that! Much respect :)

 

He's my biggest cheerleader, hah. He is working his butt off to make this possible I just handle the math since I'm good at that. We've always coordinated things like this so neither of us gets resentful about it, since the person bringing in most of the income changes depending on circumstances. Perk of being married, I suppose. :D

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He's my biggest cheerleader, hah. He is working his butt off to make this possible I just handle the math since I'm good at that. We've always coordinated things like this so neither of us gets resentful about it, since the person bringing in most of the income changes depending on circumstances. Perk of being married, I suppose. :D

 

aww thats great! I hope I can find someone that supportive one day too :P lol It seems to be rare these days!

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I was advised that we can only transfer $5k per year with no roll-over, meaning if you get say $20k for your first year of med, you can transfer $5k and you must keep the rest for yourself, you can't give them a portion of the remaining $15k next year. I could be wrong - this was H&R block who are hit and miss.

 

That's right, but this applies every year - you can transfer only up to $5,000 per year, the rest gets carried over. I have on the order of $140,000 work of credits now (maybe a bit less I don't remember).

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Bridy - There are some creative ways to "split" income while you're in school and your spouse is working but they're not as simple as they should be and require some planning. Here's what I've been able to figure out (I'm a married upper year med student and my spouse has a good job). Double check all of this with an accountant before moving any money around :)

 

Tuition credits - the previous poster was correct. you can only transfer $5000 of your tuition/textbook amount to a spouse for each school year. (the provincial amount differs slightly but ends up close to that)

 

Your spouse can "loan" you the money to pay your tuition and it becomes taxable in your hands instead of theirs (your tax bracket is probably lower than theirs.) But... any tuition credits you have accumulated will be used to offset this "income." Also, you have to pay him/her the current minimum interest rate on the "loan" by January 31 following the tax year. I think that the minumum interest rate right now is around 1% and forget the technical term for it (sorry).

 

Any money your spouse deposits into your TFSA becomes taxable in your hands (but is subject to all of the deposit/withdrawl rules of a TFSA).

 

The CRA is notorious for auditing all of these so make sure you've created the proper paper trail. It's probably worth spending a little extra money to have a professional take care of it since you'll save money in the long term.

 

Canada sure makes it difficult to income split! I, personally, think it's kinda unfair :(

 

Hope this helps somewhat and good luck next year! Being a married med student is fun. You get to live vicariously through everyone else's relationship drama while having a (hopefully) super supportive helper at home to remind you that there's an entire world out there besides school!

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Bridy - There are some creative ways to "split" income while you're in school and your spouse is working but they're not as simple as they should be and require some planning. Here's what I've been able to figure out (I'm a married upper year med student and my spouse has a good job). Double check all of this with an accountant before moving any money around :)

 

Tuition credits - the previous poster was correct. you can only transfer $5000 of your tuition/textbook amount to a spouse for each school year. (the provincial amount differs slightly but ends up close to that)

 

Your spouse can "loan" you the money to pay your tuition and it becomes taxable in your hands instead of theirs (your tax bracket is probably lower than theirs.) But... any tuition credits you have accumulated will be used to offset this "income." Also, you have to pay him/her the current minimum interest rate on the "loan" by January 31 following the tax year. I think that the minumum interest rate right now is around 1% and forget the technical term for it (sorry).

 

Any money your spouse deposits into your TFSA becomes taxable in your hands (but is subject to all of the deposit/withdrawl rules of a TFSA).

 

The CRA is notorious for auditing all of these so make sure you've created the proper paper trail. It's probably worth spending a little extra money to have a professional take care of it since you'll save money in the long term.

 

Canada sure makes it difficult to income split! I, personally, think it's kinda unfair :(

 

Hope this helps somewhat and good luck next year! Being a married med student is fun. You get to live vicariously through everyone else's relationship drama while having a (hopefully) super supportive helper at home to remind you that there's an entire world out there besides school!

 

Thank you for all of that. :) I'm pretty good with this type of thing generally (paperwork and whatnot) but I will likely seek an accountant in the near future to see ways we can save. I'm just entering my UG, so by the time I actually get into med school, we'll likely have things sorted in the most beneficial way. I appreciate all the advice, truly.

 

And yes, not dealing with relationship drama is wonderful. Having a built-in support system at home is awesome. :)

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