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How do i know if i have over contributed to my TFSA (Tax Free Savings Account) kept at different bank accounts?

+15 votes
For some strange reason i have a habit of opening several bank accounts with different banks. Not that i have a lot of money to keep in the various account, i guess it is just a matter of personal preference. Over the years, i have opened several TFSA (Tax Free Savings Account) with different banks in Canada and i did contribute some money into each of them. But at times, i find it hard to track and keep a check on how much i have contributed to each TFSA account in different banks and how much contribution room do i have left for the current year. How do i know the amount of contribution room that i have for any current year, so that i would not have to pay a penalty, if i over contributed to the TFSA accounts.
asked in Bridgewater by Taylor Roberts (160 points)

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2 Answers

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When you have several Tax Free Saving Account opened and active at various banks, it can be hard to keep a track on how much you have deposited into each TFSA account and how much contribution room is left. One simple way to check how much you have put into each bank TFSA account, is the pen and paper method. You go online to each bank account and browse through how much money you had put into each account throughout the current year. Write them down on a piece of paper. Then you add them all up together and see if you have over exceeded the TFSA contribution limit for the current year.

In order to find out how much contribution room you are allowed in the current year, you can find it out at "My Account" login at the Canada Revenue Agency website.

(1) Login to CRA's "My Account" website and click on "RRSP and TFSA" section.

(2) Click on "Tax Free Savings Account"

(3) Click on "Contribution Room".

(4) Click on "Next"

(5) Then you would see the current year contribution room for your TFSA account.

So, whatever amount you have in each bank, added up together should not exceed this amount above as shown in the contribution room for your TFSA.

One good things about the TFSA account is that once you withdrew money from the account for the current year, you can put back money into your TFSA account, but the contribution room will increase to include the interest portion that you earned from putting money into your TFSA account. For example: If your current year contribution room was $50,000 and you earned an interest of $500 by the end of the year. Next year's contribution room will be $50,500 + $5000 (Yearly increase allowance) = $55,500. So every year you earn interest from the money you put into your TFSA account, the same amount of interest amount is added to and converted into contribution room allowance each year.

answered by Jacob Lush (140 points)
0 votes
Watch video on "All you need to know about Tax Free Savings Account (TFSA) in brief introduction":

answered by TFSA Guide

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