query: Beyond RRSP deductions, how does a high income earner save on taxes?

positive: That's not especially high income, and while I can't speak for Canadians,  most of us south of the border just pay the tax. There are tax-advantged retirement savings plans, and charitable donations are often offset by a tax credit, and there are some tax incentives for mortgages, and so on.. but generally the right answer is to just accept that the income tax money was never yours to begin with.

negative: Though I did answer the linked question, I thought to quote parts of this article. Source: The RRSP advantage, by David Hodges, February 6th 2015 [John] Storjohann ['the 58-year-old Calgary project manager'] is keenly aware of the two main advantages of RRSPs: the tax refund when you make a contribution, and the tax-deferred growth until you make withdrawals in retirement. These make RRSPs ideal for those who expect to be in a lower tax bracket when they stop working—which will be the case for most Canadians. For those in the highest tax bracket today, the RRSP is a no-brainer. That’s why Storjohann’s always surprised when he meets people pulling in good incomes who think TFSAs stack up better than RRSPs. “People just don’t understand how these accounts work.” This is the most common objection to RRSPs: people simply hate the idea of paying taxes on the withdrawals. Money taken out of a TFSA, by contrast, is tax-free, which sounds far more appealing. But that logic ignores the fact that you receive a tax refund when you put money in an RRSP, while TFSA contributions are made with after-tax dollars. So for the Fosters and other Canadians weighing this decision, it comes down to whether it’s better to pay tax now or later. And that’s not an easy question to answer. Both Hamilton and Kirzner say that anyone earning more than $50,000 is usually better off prioritizing RRSPs over TFSAs. While both accounts allow your investments to grow tax-free, the tax refund makes the RRSP more attractive for high-income earners. ... That, in a nutshell, is what makes RRSPs better than TFSAs for higher earners: Not only are you taxed on your money years later, but because you’re in a lower bracket when you retire, you’ll pay less tax too.  When your income is between $35,000 and $50,000, the long-term tax differences between RRSPs and TFSAs become negligible, says Malcolm Hamilton. In that salary range, “just being able to put money aside in either an RRSP or a TFSA is great.” But RRSPs can still be a better choice for reasons that don’t involve tax deferral or refunds. In his new book, Wealthing Like Rabbits, author Robert Brown makes the case for favouring RRSPs over TFSAs most of the time because the former usually means less temptation to access your retirement savings early. Footnote: This 2012 CBC.ca article intelligibly explains RRSPs, free of jargon.

negative: "First, the limit this year is $16,500, $22,000 for age 50 or older. Next, does the company give you any match? If so, how much? Some will match your deposits dollar for dollar up to a certain percent of your pay. If you make $50k and deposit say 6%, that's $3k matched by company, for example. This deposit/match is the first priority.  Next, you should understand the expenses in the account. A bad 401(k) with high cost quickly negates any tax deferral benefit. The 401(k) options also may be limited, what are the choices of investments?  Is your income high enough that you can save $21,500? One thought is to save enough to drop back out of the 25% bracket, and go Roth after that. This is a good balance for most. By the way, Fairmark is a great site to see what bracket you are in. If your return is simple, you can just find your standard deduction and exemption numbers and get to your taxable income very simply. The debate of of Roth vs Pretax (for both IRA and 401(k) accounts) can get pretty complex, but I found the majority of earners falling into the ""live in the 15% bracket, tops"" range."

negative: As a rule of thumb, no.  Only in very rare circumstances will it prove better than a RRSP.  The media has overplayed the usefulness of this account type for retirement savings.  That's just a general rule.  Your specific situation will make a difference but it's very easy to show that RRSPs will always outperform if the marginal rates are lower on withdrawal than when you deduct contributions from income. If you plan to use the money before retirement or you're expecting to collect GIS on retirement then you may need to look at the specifics of your situation.  If you plan to put money in a RRSP and carry forward the deduction to use at a later date then it doesn't matter whether you put it in a RRSP now or use the TFSA and transfer it later. The RRSP also has advantages of some tax treaties and creditor protection.  It (as a RRIF) can also be used after 65 for income splitting and the pension credit. An RESP can also provide a greater return as you get free money, which is always good.  There are many other things you can do with it but I'd say it's always better in a TFSA than paying tax in a regular account.   Since you pay the mortgage with after tax dollars that could be another option for the cash and it's a guaranteed return, albeit small nowadays.

negative: "The primary tax-sheltered investing vehicles in Canada include: The RRSP. You can contribute up to 18% of your prior year's earned income, up to a limit ($24,930 in 2015, plus past unused contribution allowance) and receive an income tax deduction for your contributions. In an RRSP, investments grow on a tax-deferred basis. No tax is due until you begin withdrawals. When you withdraw funds, the withdrawn amount will be taxed at marginal income tax rates in effect at that time. The RRSP is similar to the U.S. ""traditional"" IRA, being an individual account with pre-tax contributions, tax-deferred growth, and ordinary tax rates applied to withdrawals. Yet, RRSPs have contribution limits higher than IRAs; higher, even, than U.S. 401(k) employee contribution limits. But, the RRSP is dissimilar to the IRA and 401(k) since an individual's annual contribution allowance isn't use-it-or-lose-it—unused allowance accumulates. The TFSA. Once you turn 18, you can put in up to $5,500 each year, irrespective of earned income. Like the RRSP, contribution room accumulates. If you were 18 in 2009 (when TFSAs were introduced) you'd be able to contribute $36,500 if you'd never contributed to one before. Unlike the RRSP, contributions to a TFSA are made on an after-tax basis and you pay no tax when you withdraw money. The post-tax nature of the TFSA and completely tax-free withdrawals makes them comparable to Roth-type accounts in the U.S.; i.e. while you won't get a tax deduction for contributing, you won't pay tax on earnings when withdrawn. Yet, unlike U.S. Roth-type accounts, you are not required to use the TFSA strictly for retirement savings—there is no penalty for pre-retirement withdrawal of TFSA funds. There are also employer-sponsored defined benefit (DB) and defined contribution (DC) retirement pension plans. Generally, employees who participate in these kinds of plans have their annual RRSP contribution limits reduced. I won't comment on these kinds of plans other than to say they exist and if your employer has one, check it out—many employees lose out on free money by not participating. The under-appreciated RESP. Typically used for education savings. A lifetime $50,000 contribution limit per beneficiary, and you can put that all in at once if you're not concerned about maximizing grants (see below). No tax deduction for contributions, but investments grow on a tax-deferred basis. Original contributions can be withdrawn tax-free. Qualified educational withdrawals of earnings are taxed as regular income in the hands of the beneficiary. An RESP beneficiary is typically a child, and in a child's case the Canadian federal government provides matching grant money (called CESG) of 20% on the first $2500 contributed each year, up to age 18, to a lifetime maximum of $7200 per beneficiary. Grant money is subject to additional conditions for withdrawal. While RESPs are typically used to save for a child's future education, there's nothing stopping an adult from opening an RESP for himself. If you've never had one, you can deposit $50,000 of after-tax money to grow on a tax-deferred basis for up to 36 years ... as far as I understand. An adult RESP will not qualify for CESG. Moreover, if you use the RESP strictly as a tax shelter and don't make qualified educational withdrawals when the time comes, your original contributions still come out free of tax but you'll pay ordinary income tax plus 20% additional tax on the earnings portion. That's the ""catch""*. *However, if at that time you have accumulated sufficient RRSP contribution room, you may move up to $50,000 of your RESP earnings into your RRSP without any tax consequences (i.e. also avoiding the 20% additional tax) at time of transfer. Perhaps there's something above you haven't considered. Still, be sure to do your own due diligence and to consult a qualified, experienced, and conflict-free financial advisor for advice particular to your own situation."

negative: "Federal taxes are generally lower in Canada.  Canada's top federal income tax rate is 29%; the US rate is 35% and will go to 39.6% when Bush tax cuts expire.  The healthcare surcharge will kick in in a few years, pushing the top bracket by a few more points and over 40%. State/provincial taxes are lower in the US.  You may end up in the 12% bracket in New York City or around 10% in California or other ""bad"" income-tax states.  But Alberta is considered a tax haven in Canada and has a 10% flat tax.  Ontario's top rate is about 11%, but there are surtaxes that can push the effective rate to about 17%. Investment income taxes: Canada wins, narrowly.  Income from capital gains counts as half, so if you're very rich and live in Ontario, your rate is about 23% and less than that in Alberta.  The only way to match or beat this deal in the US in the long term is to live in a no-income-tax state.  Dividends are taxed at rates somewhere between capital gains and ordinary income - not as good a deal as Bush's 15% rate on preferred dividends, but that 15% rate will probably expire soon. Sales taxes: US wins, but the gap is closing.  Canada has a national VAT-like tax, called GST and its rate came down from 7% to 5% when Harper became the Prime Minister.  Provinces have sales taxes on top of that, in the range of 7-8% (but Alberta has no sales tax).  Some provinces ""harmonized"" their sales taxes with the GST and charge a single rate, e.g. Ontario has a harmonized sales tax (HST) of 13% (5+8).  13% is of course a worse rate than the 6-8% charged by most states, but then some states and counties already charge 10% and the rates have been going up in each recession. Payroll taxes: much lower in Canada.  Canadian employees' CPP and EI deductions have a low threshold and top out at about $3,000.  Americans' 7.65% FICA rate applies to even $100K, resulting in a tax of $7,650. Property taxes: too dependent on the location, hard to tell. Tax benefits for retirement savings: Canada.  If you work in the US and don't have a 401(k), you get a really bad deal: your retirement is underfunded and you're stuck with a higher tax bill, because you can't get the deduction.  In Canada, if you don't have an RRSP at work, you take the money to the financial company of your choice, invest it there, and take the deduction on your taxes.  If you don't like the investment options in your 401(k), you're stuck with them.  If you don't like them in your RRSP, contribute the minimum to get the match and put the rest of the money into your individual RRSP; you still get the same deduction.  Annual 401(k) contribution limits are use-it-or-lose-it, while unused RRSP limits and deductions can be carried forward and used when you need to jump tax brackets.  Canada used to lack an answer to Roth IRAs, but the introduction of TFSAs took care of that. Mortgage interest deduction: US wins here as mortgage interest is not deductible in Canada. Marriage penalty: US wins.  Canadian tax returns are of single or married-filing-separately type.  So if you have one working spouse in the family or a big disparity between spouses' incomes, you can save money by filing a joint return.  But such option is not available in Canada (there are ways to transfer some income between spouses and fund spousal retirement accounts, but if the income disparity is big, that won't be enough). Higher education: cheaper in Canada. This is not a tax item, but it's a big expense for many families and something the government can do about with your tax dollars. To sum it up, you may face higher or lower or about the same taxes after moving from US to Canada, depending on your circumstances.  Another message here is that the high-tax, socialist, investment-unfriendly Canada is mostly a convenient myth."

negative: "Probably not. For your savings to enter an RRSP account, the recipient account must itself be an RRSP (duh! I hear you say). This appears to rule out any UK-based banks as they would not offer this type of account, which appears to be confirmed with a quick Google search returning no useful result for ""rrsp uk"". According to Income Tax Folio S3-F10-C1, Qualified Investments – RRSPs, RESPs, RRIFs, RDSPs and TFSAs, an RRSP may include listed securities traded on designated stock exchanges, including the London Stock Exchange. While this enables some possibilities, it is not clear that Canadian banks would offer much in the form of UK RRSPs. Your best bet may be to contact your bank and ask if they offer RRSP services for expats. Here is a list of Canadian banks in the UK. Obviously, this does not mean that they offer the type of service you are looking for (or even that they offer retail services, this may be just a trading office). Finally, if you need to move money from an RRSP to anything other than an RRSP this will trigger the inclusion of the sale proceeds as taxable income in that year."

negative: There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it.

negative: "Has anyone ever proposed significantly lowering the US corporate tax while simultaneously raising dividend taxes for high income earners? Hell, many economists believe that corporate income should be taxed at 0%. If you do this but are worried about ""teh evil corporations"" becoming too big and powerful, that's what a high tax on dividend income is for. You can't personally become rich from a corporation without earning dividend or salary income from a corporation's coffers."

negative: "Your question is based on incorrect assumptions. Generally, there's no ""penalty"", per se, to make a withdrawal from your RRSP, even if you make a withdrawal earlier than retirement, however you define it. A precise meaning for ""retirement"" with respect to RRSPs is largely irrelevant.* Our U.S. neighbours have a 10% penalty on non-hardship early withdrawals (before age 59 ½) from retirement accounts like the 401k and IRA. It's an additional measure designed to discourage early withdrawals, and raise more tax.  Yet, in Canada, there is no similar penalty. Individual investments inside your RRSP may have associated penalties, such as the dreaded ""deferred sales charge"" (DSC) of some back-end loaded mutual funds, or such as LSVCC funds that generated additional special tax credits that could get clawed back.  Yet, these early withdrawal penalties are distinct from the RRSP nature of your account.  Choose your investments carefully to avoid these kinds of surprises. Rather, an RRSP is a tax-deferred account, and it works like this:  The government allows you to claim a nice juicy tax deduction, which can reduce your income tax at your marginal rate in the year you make a contribution, or later if you should choose to defer the deduction. The resulting pre-tax money accumulated in your RRSP benefits from further tax deferral: assets can grow without attracting annual income tax on earned interest, dividends, or capital gains. You don't need to declare on your income tax return any of the income earned inside your RRSP, unlike a regular investment account. Here's the rub: Once you decide to withdraw money from your RRSP, the entire amount withdrawn is considered regular income in the year in which you make the withdrawal.  Thus, your withdrawals are subject to income tax, and yes, at your marginal rate.  This is always the case, whether before or after retirement. You mentioned two special programs: The Home Buyers' Plan (HBP), and the Lifelong Learning Plan (LLP).  Neither the HBP nor the LLP permit tax-free withdrawals.  Rather, each of these programs are special kinds of loans that you can borrow from your own RRSP. HBP and LLP loan money isn't taxed when you get it because you are required to pay it back, and you pay it back into your own RRSP: You always pay income tax at your marginal rate on your RRSP withdrawals.** * Above, I said a precise meaning for ""retirement"" with respect to RRSPs is largely irrelevant.  Yet, there are ages that matter:  By the end of the year in which you turn 71, you are required to convert your RRSP to a RRIF. It's similar, but you can no longer contribute, and you must withdraw a minimum amount each year. Other circumstances related to age may qualify for minor tax relief intended for retirees, such as the Age Amount or the Pension Income Credit.  Generally, such measures don't significantly change the fact that you pay income tax on RRSP withdrawals at your marginal rate – these measures raise the minimum you can take out without attracting tax, but most do nothing at the margin.** ** Exception: One might split eligible pension income with a spouse or common-law partner, which may reduce tax at the margin."

negative: "Welcome to the 'what should otherwise be a simple choice turns into a huge analysis' debate. If the choice were actually simple, we've have one 'golden answer' here and close others as duplicate. But, new questions continue to bring up different scenarios that impact the choice.  4 years ago, I wrote an article in which I discussed The Density of Your IRA. In that article, I acknowledge that, with no other tax favored savings, you can pack more value into the Roth.  In hindsight, I failed to add some key points. First, let's go back to what I'd describe as my main thesis: A retired couple hits the top of the 15% bracket with an income of   $96,700. (I include just the standard deduction and exemptions.) The   tax on this gross sum is $10,452.50 for an 'average' rate of 10.8%. The tax, paid or avoided, upon deposit, is one's marginal rate. But,   at retirement, the withdrawals first go through the zero bracket (i.e.   the STD deduction and exemptions), then 10%, then 15%. The above is the simplest snapshot. I am retired, and our return this year included Sch A, itemized deductions. Property tax, mort interest, insurance, donations added up fast, and from a gross income (IRA withdrawal) well into the 25% bracket, the effective/average rate was reported as 7.3%. If we had saved in Roth accounts, it would have been subject to 25%.  I'd suggest that it's this phenomenon, the ""save at marginal 25%, but withdraw at average sub-11%"" effect that account for much of the resulting tax savings that the IRA provides.  The way you are asking this, you've been focusing on one aspect, I believe. The 'density' issue. That assumes the investor has no 401(k) option. If I were building a spreadsheet to address this, I'd be sure to consider the fact that in a taxable account, long term gains are taxed at 15% for higher earners (I take the liberty to ignore  that wealthier taxpayers will pay a maximum 20% tax on long-term capital gains. This higher rate applies when your adjusted gross income falls into the top 39.6% tax bracket.) And those in the 10 or 15% bracket pay 0%. With median household income at $56K in 2016, and the 15% bracket top at $76K, this suggests that most people (gov data shows $75K is 80th percentile) have an effective unlimited Roth. So long as they invest in a way that avoids short term gains, they can rebalance often enough to realize LT gains and pay zero tax.  It's likely the $80K+ earner does have access to a 401(k) or other higher deposit account. If they don't, I'd still favor pretax IRAs, with $11K for the couple still 10% or so of their earnings. It would be a shame to lose that zero bracket of that first $20K withdrawal at retirement. Again working backwards, the $78K withdrawal would take nearly $2M in pretax savings to generate. All in today's dollars."

negative: In response to your points #1 and #2: In general, yes it is true that capital gains are only subject to half one's marginal rate of income tax.  That doesn't mean 50% of the gain is due as tax... rather, it means that if one's marginal tax rate (tax bracket) on the next $10K would have been, say, 32%, then one is taxed on the gain at 16%.  (The percentages are examples, not factual.) However, because these are employee stock options, the tax treatment is different than for a capital gain!    Details: On the Federal tax return are lines for reporting Security option benefits (Line 101) and Security options deductions (Line 249).  The distinction between a regular capital gain and an employee stock option benefits is important.  In many cases the net effect may be the same as a capital gain, but the income is characterized differently and there are cases where it matters.  Somebody who is about to or has realized employee stock option benefits should seek professional tax advice. In response to your next two points: No, one cannot transfer a capital gain or other investment income into a TFSA immediately after-the-fact in order to receive the tax-free benefits of the TFSA on that income.  Only income and gains earned within a TFSA are free from tax – i.e. The options would have to have been in the TFSA before being exercised.  Once a gain or other investment income has been realized in a non-sheltered account, it is considered taxable.  The horse has already left the barn, so to speak! However, despite the above, there is another strategy available:  One can create an offsetting deduction by contributing some of the realized gain into an RRSP.  The RRSP contribution, assuming room is available, would yield a tax deduction to offset some tax due on the gain.  However, the RRSP only defers income tax; upon withdrawal of funds, ordinary income tax is due (hopefully, at a lower marginal rate in retirement.) There is no minimum amount of time that money or assets have to be inside a TFSA to benefit from the tax-free nature of the account.  However, there are limits on how much money you can move into a TFSA in any given year, and many folks weren't aware of the rules. p.s. Let me add once more that this is a case where I suggest seeking professional tax advice.

negative: There are two significant drawbacks to this type of transfer. They were the reasons why I kept my American 401(k) as-is and started funding my Canadian RRSP from zero balance. 1. Taxes - a large chunk of your 401(k) will be lost to taxes. There is probably no way to transfer the funds without making a 401(k)/IRA withdrawal, which will incur the US federal tax and the 10% early-withdrawal penalty.  When the money went into the 401(k), you got a tax deduction in the US and the tax break is supposed be repaid later when you make a withdrawal (that's basically how tax deferral works).  It's unlikely that any country will let you take a deduction first and send the payback to a foreign country.  The withdrawal amount may also be taxable in Canada (Canadians generally pay taxes on their global income and that includes pensions and distributions from foreign retirement plans).  Foreign tax credit will apply of course, to eliminate double taxation, but it's of little help if your marginal Canadian tax rate is higher than your average US tax rate. 2. Expenses. Your RRSP will have to be invested in something and mutual fund management expenses are generally higher in Canada than in the US.  For example, my employer-sponsored RRSP has a Standard & Poor's stock index fund that charges 1.5% and that is considered low-cost.  It also offers a number of managed funds with expenses in excess of 2% that I simply ignore.  You can probably invest your American 401(k)/IRA in mutual funds more efficiently.

negative: "If you have a huge disparity in incomes, ""maybe"".   If you make roughly in the same ballpark, **Noooooo!**   The ability to file separately and have one partner (the higher earner) itemize and claim all the home-related deductions while the other takes the standard deduction is one of the greatest (middle-class) loopholes in modern tax law.  When married, even if filing separately, you have to both itemize or both take the standard deduction.   You just need to take care that the person itemizing has provably contributed *at least* the amount they claim toward the house.  So have one of you write the checks for the mortgage and property tax, and the other pay for everything else, and it'll probably come out roughly even over time.  Going back to my first line, the US tax code seems to be designed around the stereotypical Donna Reed 1950s household, with a single earner.  The closer you are to equal, the bigger the marriage tax **penalty** gets."

negative: "For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could ""repay"" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you."

negative: This is similar to your TFSA question. While the S in RRSP or TFSA stands for savings, it does not stipulate exactly what instruments you use to build up those savings. With few exceptions, you can hold any type of investment in either an RRSP or TFSA. Thus, do not think of them as savings accounts per se, but more like umbrella accounts, or plans. It's actually the financial industry that creates these misnomers of so-called RRSPs, which are usually GICs or balanced mutual funds held inside an RRSP plan, or TFSAs, which are literally savings accounts held inside a TFSA plan. The most versatile accounts are the self-directed RRSP or TFSA accounts, usually through a discount broker, where you can purchase many different types of investments inside your registered accounts, including stocks, bonds, mutual funds, GICs, gold, etc. Thus a share purchase plan held inside an RRSP is completely eligible and may be a sensible investment for retirement savings.

negative: "Yep. You're single, you're possibly still a dependent on your parent's taxes (in lieu of rent), and you're finally bringing home bacon instead of bacon bits. Welcome to the working world. Let's say your gross salary is the U.S. median of $50,000. With bi-weekly checks (26 a year; common practice) you're getting $1923.08 per paycheck. In the 2013 ""Percentage Method"" tax tables, here's how your federal withholding is calculated as a single person paid biweekly: Federal taxes are computed piecewise; the amount up to A is taxed at X%, then the amount between A and B is taxed at Y%, so if you make $C, between A and B, the tax is (A*X) + (C-A)*Y. The amount A*X is included in the ""base amount"" for ease of calculation. Back to our example; let's say you're getting $1923.08 gross wages per check. That puts you in the 25% marginal bracket. You pay the sum of all lesser brackets (which is the ""base amount"" of the 25% bracket), plus the 25% marginal rate on every dollar that falls within the bracket. That's 191.95 + (1923.08 - 1479) * .25 = 191.95 + (444.08 * .25) = 191.95 + 111.02 = $302.97 per paycheck. The ""effective"" tax rate on the total amount, as if you were being charged a flat tax, is 15.75%, and this is just for the federal income tax. Add to this MA state income taxes (5.25% flat tax), FICA (aka Medicare; 1.45% flat) and SECA (aka Social Security; 6.2% up to a ""wage base"" that $50k doesn't even approach), and your effective tax rate on each dollar you earn is 15.75% + 5.25% + 1.45% + 6.2% = 28.65%. This doesn't include any state unemployment taxes that may be withheld separately, but as the rate I come up with is pretty darn close to what you've figured (meaning I slightly overestimated your gross income and thus your effective tax rate), my bet is that SUTA's either employer-paid in MA, or it's just part of MA state income tax. It gets better, at least at the federal level: The amount of your state income taxes is tax-deductible at the federal level if you itemize your deductions. That may not be a factor for you as you'd have to come up with more than $6,100 of other tax-deductible expenses to make itemizing the better option than taking the standard deduction (big-ticket items are mortgage expenses other than principal payments, hospital stays such as for childbirth or major accident, and state and local taxes such as sales, property and income). If you can claim yourself as a dependent (meaning your parents can't), then $150 of each check ($3,900 of your annual salary) is no longer taxed for federal withholding, lowering the amount of money taxed at the 25% marginal rate. You effectively save $37.50 biweekly ($975 annually) in taxes. Get married and file jointly, and your spouse, her personal exemption, and an extra standard deduction amount (if you don't itemize) go on your taxes. The tax rates for married couples filing jointly are also lower; they're currently calculated (or were in 2012) to be the same as if two equal earners were to file separately, so if your spouse doesn't work, your taxes on the single income are calculated at the rates you'd get if you earned half as much. It doesn't work out to half the taxes, but it is a significant ""marriage advantage"". Have kids, and each one is another little $3,900 tax write-off. It's nowhere near the cost of having or raising the child, but it helps, and having kids isn't about the money. Owning a home, making charitable deductions, having medical expenses, etc are a toss-up. The magic number in 2013 is $12,200 for a married couple, $6,100 for a single person. If your mortgage interest, insurance premiums, property taxes, medical expenditures, charitable donations, any contributions from your take-home pay to a tax-deferred savings account (typically these accounts are paid into by your employer as a ""pre-tax deduction"" and never show up as taxable income, but you could just as easily move money from your take-home pay into tax-deferred savings) and any other tax-deductible payments add up to more than 12 large, then itemize. If not, take your standard deduction. As a single taxpayer just starting out in life, you probably don't have any of these types of expenditures, certainly not enough to give up the SD. I did the math on my own taxes in 2012, and was surprised at how little the government actually gets of my paycheck when all's said and done. Remember back in the summer of 2012 when everyone was mad at Romney for making millions and only paying an effective income tax rate of 14%, which was compared to the middle class's marginal rate of 25-28%? Well, my family of 3, living on a little more than the median income from one earner (me), taking the married standard deduction, three personal exemptions, and a little extra for student loan interest, paid an effective federal income tax rate of something like 3.5%. Of course, the FICA and SS taxes don't allow any deductions (not even for retirement savings), so add in the 4.2% SS (in 2012) and 1.45% FICA and the full federal gimme was more like 9-10%."

negative: Based on your comment that you do not itemize your deductions, I think that's probably the next step for you to consider. Many of the suggestions that we would give require that you itemize. If you are not familiar with the potential deductions it would probably be worth your while to visit with a local tax professional and discuss your expenses including what changes you could make to minimize your tax bill.  Ultimately becoming eligible for the 401(k) if possible will allow you access to the biggest avenue for reducing tax liability. It sounds like you are already prioritizing and saving for retirement through your IRA, but most earners in the 25% bracket can't put the recommended 15% into savings (with tax advantages) through an IRA.

negative: How you pay Income Tax Pay As You Earn (PAYE) Most people pay Income Tax through PAYE. This is the system your employer or pension provider uses to take Income Tax and National Insurance contributions before they pay your wages or pension. Your tax code tells your employer how much to deduct. Your tax code can take account of state benefits, so if you owe tax on them (eg the State Pension) it’s usually taken automatically from your other income. Self Assessment tax returns If your financial affairs are more complex (eg you’re self-employed or have a high income) you may pay Income Tax and National Insurance through Self Assessment. You’ll need to fill in a tax return every year. Income Tax on savings and investment interest Income Tax is usually taken from interest on savings and investments automatically. Income that’s not automatically taxed You must fill in a tax return if your untaxed income is over £2,500, or if you don’t pay tax through your wages or pension. You must contact the Income Tax helpline if it’s less than £2,500.

negative: The $250K and up are not one homogeneous group. The lower end of this group benefits from normal Schedule A itemized deductions, e.g. mortgage interest, property tax, state income tax, and charitable donations. As you mention, 401(k) ($17k employee contribution limit this year), but also things like the dependent care account ($5k limit) and flexible spending account, limited usually up to $2500 in '14. The 529 deposits are limited to the gifting limit, $14K in 2014, but one can gift up to five years' deposits up front. This isn't a tax deduction, but does pull money out of one's estate and lets it grow tax free similar to a Roth IRA. The savings from such accounts is probably in the $15k - $20K range given the 20 or so year lifetime of the account and limited deposits. At the higher end, the folks making the news are those whose income is all considered capital gains. This applies both to hedge fund managers as well as CEOs whose compensation included large blocks of stock. This isn't a tax deduction, but it's how our system works, the taxation of capital gains vs. ordinary income.

negative: What fact?  >It's true that some Americans don't pay federal income tax. But virtually all Americans pay some form of tax, whether it's sales, payroll, state income, or property tax.   >Over 60% of those who don't pay income tax are working; they pay payroll tax, which goes to support Social Security and Medicare. Another 22% of those who don't pay income tax are the elderly; most of them don't work.   >In fact, only about 8% of Americans pay neither federal income tax nor payroll tax, because they are unemployed, are students, or are disabled.   >What is missing from all this talk about tax is the fact that although the rich pay higher taxes than the poor, middle-class people actually pay a higher percentage of their income in total taxes. True, federal income tax rates are progressive, with rates going to 35% for the top earners. But deductions and special treatment of capital gains reduce actual tax rates for the top earners. So what we end up with is upper-middle-class taxpayers paying the highest actual percentage of their income, over 31%, according to a 2010 study by the group Citizens for Tax Justice.  http://www.cnn.com/2012/09/20/opinion/ghilarducci-mcgahey-romney/index.html

negative: The term self-directed generally refers to RRSP accounts where the account holder has not only the ability to determine a basic investment asset mix (such as can be accomplished even with a limited selection of mutual funds) but, more specifically, the self-directed account holder has a much wider choice of financial instruments beyond mutual funds, GICs, and/or cash savings. A self-directed RRSP generally permits the account holder to also invest or trade directly in financial instruments such as: Those kinds of instruments are not typically available in a non-self-directed mutual fund or bank RRSP.  Typical mutual fund or bank RRSPs offer you only their choice of products  – often with higher fees attached. Related resources:

negative: My first question to you is if you itemize?  If not the charitable contributions will not do any good.  Along these lines, donating unused items to Goodwill or similar can help boost your charitable giving.   The bottom line is that the 401K is one of the few real deductions high earners have.  If you anticipate earning similarly next year, you could both contribute the max.  You still have some time before the end of the year, can you get more in your wife's account? Does your state have income tax?  You might be able to deduct sales tax for larger purchases if you made any.  However, I would not justify a large purchase just to write off the sales tax.  Conventional wisdom will tell you that you should have a large mortgage in order to deduct the interests.  However, it does not make sense to pay the bank 10K so you can get 3K back from the government.  That seems pretty dumb. If you did not do additional withholding, you probably will have to pay a significant amount plus penalty if you owe more than $1000.  You still have time to make one more quarterly payment, so you may want to do so by January 15th. For next year I would recommend the following: The funny thing about giving is that it rarely helps the recipient, it does so much more for the giver.  It helps you build wealth. For myself I like to give to charities that have a bent to helping people out of poverty or homelessness.  We have two excellent ones here in Orlando, FL:  Orlando Rescue Mission and Christian Help.  Both have significant job training and budgeting programs.

negative: Anybody can contribute to a traditional ira up to the maximum limit.  Does it make sense to contribute to a non-deductible IRA?  There are a couple of cases where it does:  If you're 59 1/2 or older, you're old enough to make IRA withdrawals without penalty. If you choose investments that maximize the value of tax deferral, you can use the nondeductible IRA to manage your tax burden. If you're aware of an upcoming change in tax law that will benefit high earning individuals, it might be beneficial to use a nondeductible IRA. For example - you know that income limits for converting a traditional to a Roth are going to change in the coming year. You set up a nondeductible IRA with the intention of converting it the next year, so you can get around Roth contribution rules.  Beyond these cases, the main argument for contributing to a non-deductible IRA is -- compounded returns. If your IRA has a strong, steady growth rate, compounded returns can work wonders for your contributions. Let's take a hypothetical... You are 35. You contribute the max amount of $5,500 every year until you retire at 70. With a modest growth rate of 9.5%, your total contribution of 193K would become 1.46M. The compounded returns are 7.6 times your contributions.

negative: has very little idea about how much we earn and how high up we are in terms of income percentile. The first part of this sentence is tough to understand. My daughter was 12 when she told us what she estimated our income to be. She looked up the price of our home, worked backwards using conservative numbers, and was pretty close. Here you are saying your wife doesn't know the family income?  Percentiles are meaningless. There are $60k couples who donate 10%, and there are $300k earners who are not charitable at all, and don't even save.  It's time to have a general budget conversation with her. Perhaps starting with the rate of savings, and show how there's room for charity. If your charitable desire is based on a religious compulsion, share that as well, the 10% is what many feel commanded to share by their maker, and feel that it comes off the top regardless of their income level.  In reality, this issue is not financial, it's about open dialog between 2 people. Money is difficult for some to discuss, but you need to start somewhere.

negative: "Keep in mind, there are too many variables to address in a single post. I could (and might) write a full book on the topic. One simple way to comprehend your perceived observation. In the 25% bracket, you have $1000 of income and two choices. Net out $750, and deposit to Roth, or deposit the full $1000 to the traditional IRA or 401(k). Sufficient time passes for the investment to grow 10 fold. For what it's worth, 8% at 30 years will do that.  The Roth is now worth $7500 tax free. The traditional 401(k) is worth $10000 but subject to tax. At 25%, we're at the same $7500.  For those looking to invest more than a gross $18,000, the Roth flavor is an effective $24,000, as post tax, this is $18,000. I wrote a bit more on this in the whimsically titled The Density of Your IRA. This is really a top 10%er issue, as it takes quite a bit of income for the $23,000 combined IRA and 401(k) limits to be a problem.  In my writing, the larger case to be made is for taking advantage of the tax rate difference between the time of deposit and withdrawal. A look at the 2016 tax rates is in order.  Let's stick with 25% while working. Now, at retirement, but before social security, as that's another story, the couple has $20,600 in standard deduction and exemption, and both the 10 and 15% brackets to enjoy.  Ignoring any other deductions, potential credits, etc, let's look at a gross $80,000 withdrawal.   The numbers happen to work out to an average 10%, with the couple being in a marginal 15% bracket. A full 25% or $20,000 tax would be the break-even to the ""same bracket in/out"" analysis, so this produces a $12,000 benefit.  This issue is often treated as if there were 2 points in time, the deposit, and the withdrawal. For most people, that may be the case. Keep in mind, current law allows a conversion to Roth any time in between. This gives an opportunity to make a deposit while in the 25% bracket, and convert in any year the marginal rate drops back to 15% for whatever reason.  Last - I can't ignore the Social Security problem. Simply put, when half of your Social Security benefits plus other income exceed $25,000 ($32,000 if married filing joint) your benefits start to become taxable, until 85% of your benefits are fully taxed. This issue is worthy of multiple posts by itself. It's not a deal killer, just another point to consider. A very high income earner might be beyond these levels already, in which case the point is moot. A low income earner, not impacted at all. It's those who are in the range to navigate this that would benefit to take advantage of the scenario I presented above and spend down pre-tax accounts, while planning to use the Roths when Social Security starts. This should make it clear - it's not all or none. Those retiring with $2M in 100% pretax, or $1.5M 100% in Roth have both missed the chance to have the optimal mix."

negative: You have many options, and there is no one-size-fits-all recommendation. You can contribute to your IRA in addition to your 401(k), but because you have that 401(k), it is not tax-deductable. So there is little advantage in putting money in the IRA compared to saving it in a personal investment account, where you keep full control over it. It does, however, open the option to do a backdoor-rollover from that IRA to a Roth IRA, which is a good idea to have; you will not pay any taxes if you do that conversion, if the money in the IRA was not tax deducted (which it isn't as you have the 401(k)). You can also contribute to a Roth IRA directly, if you are under the income limits for that (193k$ for married, I think, not sure for single). If this is the case, you don't need to take the detour through the IRA with the backdoor-rollover. Main advantage for Roth is that gains are tax free. There are many other answers here that give details on where to save if you have more money to save. In a nutshell, In between is 'pay off all high-interest debt', I think right after 1. - if you have any. 'High-Interest' means anything that costs more interest than you can expect when investing.

negative: I would definitely recommend contributing to an IRA. You don't know for sure you'll get hired full-time and be eligible for the 401(k) with match, so you should save for retirement on your own. I would recommend Roth over Traditional IRA in your situation, because let's say you do get hired full-time. Since the company offers a retirement plan, your 2015 Traditional IRA contribution would no longer be deductible at your income level (assuming you're single), and non-deductible Traditional IRAs aren't a very good deal (see here and here). If there's a decent chance you would get hired, this factor would override the pre-tax versus post-tax debate for me. At your income level you could go either way on that anyway. A Solo 401(k) would be worth looking into if you wanted to increase your contribution limit beyond what IRAs offer, but given that it sounds like you're just starting out saving for retirement, and you may be eligible for a 401(k) soon, it's probably overkill at this point.

negative: 40% of income going to debt payments being their line is reasonable I guess, BUT maybe it should be higher for educated high earners.  For example, currently I'm technically using about 50% of my monthly income because I'm a new graduate with some student debt and I'm trying to pay it off aggressively, in under a year.  Despite this, my income is high enough that the remaining 50% is enough to support a decent lifestyle.    In a couple of months when I'm paid off I can probably start saving several thousand dollars a month.  Do I really have a debt problem?

negative: It IS affecting our bottom line though. The rich have been taking more of the pie by suppressing wages while also getting tax cuts for decades. There's no reason that the super wealthy should be paying less tax (as a percentage of income) than Americans in the bottom tax brackets. That's a large part of why American infrastructure is crumbling, the top earners (who couldn't earn that much outside the system) aren't paying their fair share.  And don't even bother bringing up that top earners pay the most dollar amount of tax because that's exactly how it's supposed to work in a progressive system but paying the most in tax doesn't necessarily mean they're paying enough. The percent payed in tax is supposed to go UP the more you earn, not down.

negative: Your math is correct. As you point out, because of the commutative property of multiplication, Roth and traditional IRAs offer the same terminal wealth if your tax rate is the same when you pull it out as when you put it in.  Roth does lock in your tax rate as of today as you point out, which is why it frequently does not maximize wealth (most of us have a higher tax bracket when we are saving than when we are withdrawing from savings). There are a few other potential considerations/advantages of a Roth: Roth and traditional IRAs have the same maximum contribution amount.  This means the effective amount you can contribute to a Roth is higher ($5,500 after tax instead of before).  If this constraint is binding for you and you don't expect your tax rate to change, Roth is better. Roth IRAs allow you to withdraw your contributed money (not the gains) at any time without any tax or penalty whatsoever.  This can be an advantage to some who would like to use it for something like a down payment instead of keeping it all the way to retirement.  In this sense the Roth is more flexible. As your income becomes high, the deductibility of traditional IRA contributions goes to zero if you have a 401(k) at work (you can still contribute but can't deduct contributions).  At high incomes you also may be disallowed from contributing to a Roth, but because of the backdoor Roth loophole you can make Roth contributions at any income level and preserve the full Roth tax advantage. Which type of account is better for any given person is a complex problem with several unknowns (like future tax rates).  However, because tax rates are generally higher when earning money, for most people who can contribute to them, traditional IRAs maximize your tax savings and therefore wealth. Edit: Note that traditional IRA contributions also reduce your AGI, which is used to compute eligibility for other tax advantages, like the child care tax credit and earned income credit.  AGI is also often used for state income tax calculation. In retirement, traditional IRA distributions may or may not be state taxable, depending on your state and circumstances.

negative: I think the OP is getting lost in designations.  Sounds to me that what he wants is a 'financial advisor' not an 'investment advisor'.  Does he even have investments?  Does he want to be told which securities to buy?   Or is he wanting advice on overall savings, insurance, tax-shelters, retirement planning, mortgages, etc.  Which is a different set of skills - the financial advisor skill set. Accountants don't have that skill set.  They know operating business reporting, taxes and generally how to keep it healthy and growing.  They can do personal tax returns (as a favour to only the owners of the business they keep track of usually). IMO they can deal with the reporting but not the planning or optimization. But IMO the OP should just read up and learn this stuff for himself.  Accreditation mean nothing.  Eg.  the major 'planner' brand teaches factually wrong stuff about RRSPs - which are the backbone of Canadian's finances.

negative: Last I checked, all business expenses in regards to  * Office Supplies * Stationary * Phone service * Marketing  are all tax deductible....so how does cutting those costs save money when you'll get that money back via the corporate tax code?


query: Why I can't view my debit card pre-authorized amounts?

positive: "The simplest answer to why you can't see it in your online statement is a design/business decision that was made, most probably originally to make online statements differ as little as possible from old fashioned monthly printed statements; the old printed statements never showed holds either. Some banks and card services actually do show these transactions online, but in my experience these are the rare exceptions - though with business/commercial accounts I saw this more, but it was still rare. This is also partly due to banks fearing lots of annoying phone calls from customers and problems with merchants, as people react to ""hey, renting that car didn't cost $500!"" and don't realize that the hold is often higher than the transaction amount and will be justified in a few days (or weeks...), etc - so please don't dispute the charges just yet. Behind the scenes, I've had bankers explain it to me thusly (the practice has bitten me before and it bothered me a lot, so I've talked to quite a few bankers about this): There are two kinds of holds: ""soft holds"" and ""hard holds"". In a soft hold, a merchant basically asks the bank, ""Hey, is there at least $75 in this account?"" The bank responds, and then has it's own individually set policy per account type as to how to treat that hold. Sometimes they reserve no money whatsoever - you are free to spend that money right out and rack up NSF fees to your heart's content. Yet some policies are to treat this identically to a hard hold and keep the money locked down until released. The hard hold is treated very much like an actual expenditure transaction, in that the money is locked and shown as no longer available to you. This varies by bank - some banks use an ""Account Balance"" and an ""Available Balance"", and some have done away with these dual terms and leave it up to you to determine what your balance is and what's ""available"" (or you have to call them). The key difference in the hard hold and a real expenditure is, technically, the money is still in your bank account; your bank has merely ""reserved"" it, earmarking it for a specific purchase (and gently promising the merchant they can have their money later), but the biggest difference is there is a time-limit. If a merchant does not process a completion to the transaction to claim the money, your bank will lift the hold after a period of time (I've seen 7-30 days as typical in the US, again varying by institution) returning your money to your balance that is available for purchasing and withdrawal. In every case, any vaguely decent banking institution allows you to call them, speak to some bank employee, and they can look up your account and inform you about the different sort of holds that are on your account that are not pending/completed purchase transactions. From a strictly cynical (perhaps rightly jaded) point of view, yes this is also used as a method to extort absurdly high fees especially from customers who keep a low balance in their account. I have had more than one bank charge NSF fees based on available balances that were due to holds made by gas pumps, for instance, even though my actual ""money in my account"" never went below $0 (the holds were for amounts larger than the actual transaction). And yes, the banks usually would waive those fees if you bothered to get someone on the phone or in person and made yourself a nuisance to the right person for long enough, but they made you work for it. But I digress.... The reality is that there are lots of back and forth and middle-men in transactions like this, and most banks try to hide as much of this from you the client as possible, partly because its a huge confusing hassle and its part of why you are paying a bank to handle this nonsense for you to start with.  And, as with all institutions, rules and policies become easily adjusted to maximize revenues, and if you don't keep sizable liquid minimum balances (100% of the time, all year long) they target you for fees.  To avoid this without having fat wads of extra cash in those accounts, is use an entirely disconnected credit card for reservations ONLY - especially when you are traveling and will be making rentals and booking hotels. Just tell them you wish to pay with a different card when you are done, and most merchants can do this without hassle. Since it's a credit card with monthly billing you can often end up with no balance, no waiting around for a month for payments to clear, and no bank fees! It isn't 100%, but now I never - if I can possibly avoid it - use my debit/bank card to ""reserve"" or ""rent"" anything, ever."

positive: No money is stolen. They don't show you the hold for whatever reason (not so good a bank?), but the money is still yours. You just cannot use it, but it is still on your account. These holds usually go away after a week. In certain cases (like a security deposit) it may take up to 30 days. You can request from the merchant to cancel the hold if it is no longer necessary. They'll have to be proactive on that, and some merchants wouldn't want the hassle. It is however a known issue. When I was working in the banking industry, we would routinely receive these hold cancellation requests from merchants (hotels and car rentals).

positive: The hard hold is the bank holding your money for no reason but to make money of your. Like the hotel took deposit for my over night and they released the time checked out in there system but it never showed on my account . I had to call the bank why the numbers are not adding up to my current balance. It's illegal practice by banks to hold your money until your realize you didn't spent that much and that musing amount is not even showing on your account. When it happen they will release after 30 days or you can call the bank right away soon as you done your business so you can use the money right away not the bank

negative: "What is a good bank to use for storing my pay? Preferrably one that has free student accounts. Can I save money from my paychecks   directly to a Canadian bank Otherwise, can I connect my bank account   to my Canadian account online? Any (almost...) bank in the US has free college checking accounts. If the bank you entered doesn't - exit, and step into the one next door which most likely will. The big names - Wells Fargo, Bank Of America, Chase, Bank of the West, Union Bank, Citi etc - all have it. Also, check your local credit union. Do I need any ID to open a bank account? I have Canadian citizenship and a J-1 visa Bring your passport and a student card/driving license (usually 2 ID's required). What form of money should I take with me? Cash? Should I apply for a   debit card? Can I use my Canadian credit card for purchasing anything   in the states? (Canadian dollar is stronger than US dollar currently,   so this could be to my advantage?) There's some fuss going on about debit cards right now. Some big banks (Bank of America, notably) decided to charge fees for using it. Check it, most of the banks are not charging fees, and as far as I know none of the credit unions are charging. So same thing - if they charge fees for debit card - step out and move on to the next one down the street. Using debit card is pretty convenient, cash is useful for small amount and in places that don't accept cards. If you're asking about how to move money from Canada - check with your local (Canadian) bank about the conversion rates and fees for transfers, check cashing, ATM, card swipes, etc - and see which one is best for you. When I moved large amounts of money across the border, I chose wire transfer because it was the cheapest, but for small amounts many times during the period of your stay it may be more expensive. You can definitely use your Canadian credit/debit card in the States, you'll be charged some fee by your credit card company, and of course the conversion rate. How much tax does I have to pay at the end of my internship? Let's assume one is earning $5,000 per month plus a one time $5,000 housing   stipend, all before taxes. Will I be taxed again by the Canadian   government? $5K for internship? Wow... You need to talk to a tax specialist, there's probably some treaty between the US and Canada on that, and keep in mind that the State of California taxes your income as well. What are some other tips I can use to save money in the California? California is a very big place. If you live in SF - you'll save a lot by using the MUNI, if your internship is in LA - consider buying an old clunker if you want to go somewhere. If you're in SD - just enjoy the weather, you won't get it in Canada. You'll probably want a ""pay as you go"" wireless phone plan. If your Canadian phone is unlocked GSM - you can go to any AT&T or T-Mobile store and get a pre-paid SIM for free. Otherwise, get a prepaid phone at any groceries store. It will definitely be cheaper than paying roaming charges to your Canadian provider. You can look at my blog (I'm writing from California), I accumulated a bunch of saving tips there over the years I'm writing it."

negative: "You should probably call the travel agency and complain. Not that they will care, but if by any chance they do - they can ask PayPal to remove the block. This is what is called ""authorization pending"". Usually, a credit card transaction has two stages: The merchant requests its payment processor to authorize the transaction. The processor will contact the card issuer with the transaction details and will get the authorization code which will be passed to the merchant. At that stage the transaction enters the ""pending"" stage on your account. The merchant submits the transaction and gets the money from its payment processor, who forwards the transaction to the card issuer and gets the money from there. The card issuer charges the card owner. The transaction should have the same authorization code received in step #1, and by matching it to the pending transaction, the card issuer removes the pending transaction, and posts the actual transaction. However, if the transaction in step #2 doesn't include the code from step #1, the match doesn't occur and you see the situation you have now: both the actual transaction and the pending are active. In this case the merchant should contact its merchant processor and request the revocation of the authorization code. The processor will then forward the request to the card issuer, who will then remove the pending transaction. As you can see - multiple parties have to actually care for that to happen, and many times they don't, because they don't have to. As to the period - it's up to the card issuer (PayPal in your case), but 1 month is a very long time. Usually it's about a week or two, unless it's a hotel/car rental. In any case - once it expires, it will go away on its own and if you don't mind for the amounts to be blocked until then - just let it expire. The fact that you used a debit card for this transaction is irrelevant. Unless it was a pin transaction, debit card transactions are processed as credit card transactions by processors. For pin transactions, there process is different and you shouldn't see doubles. If it was a pin transaction - contact PayPal and check with them what's going on. Generally, PayPal is not to be used as a ""bank account"", it is merely a payment processor, and it is advised to remove the money from there as soon as possible."

negative: "You ask about the difference between credit and debit, but that may be because you're missing something important. Regardless of credit/debit, there is value in carrying two different cards associated with two different accounts. The reason is simply that because of loss, fraud, or your own mismanagement, or even the bank's technical error, any card can become unusable for some period of time. Exactly how long depends what happened, but just sending you a new card can easily take more than one business day, which might well be longer than you'd like to go without access to any funds. In that situation you would be glad of a credit card, and you would equally be glad of a second debit card on a separate account. So if your question is ""I have one bank account with one debit card, and the only options I'm willing to contemplate are (a) do nothing or (b) take a credit card as well"", then the answer is yes, take a credit card as well, regardless of the pros or cons of credit vs debit. Even if you only use the credit card in the event that you drop your debit card down a drain. So what you can now consider is the pros and cons of a credit card vs managing an additional bank account -- unless you seriously hate one or more of the cons of credit cards, the credit card is likely to win. My bank has given me a debit card on a cash savings account, which is a little scary, but would cover most emergencies if I didn't have a credit card too. Of course the interest rate is rubbish and I sometimes empty my savings account into a better investment, so I don't use it as backup, but I could. Your final question ""can a merchant know if I give him number of debit or credit card"" is already asked: Can merchants tell the difference between a credit card and embossed debit card? Yes they can, and yes there are a few things you can't (or might prefer not to) do with debit. The same could even be said of Visa vs. Mastercard, leading to the conclusion that if you have a Visa debit you should look for a Mastercard credit. But that seems to be less of an issue as time goes on and almost everywhere in Europe apparently takes both or neither. If you travel a lot outside the EU then you might want to be loaded down with every card under the sun, and three different kinds of cash, but you'd already know that without asking ;-)"

negative: From a Canadian point of view, I think we are generally very similar to how you describe Austria.  The only thing I use cash for, is to pay for my coffee at a local micro-roaster who only accepts cash.  Cheques, I only use to pay friends.  Everything else is debit or credit card.  Very few businesses around here will even accept cheques anymore.

negative: I was hoping to comment on the original question, but it looks to me like the asker lives in the EU, where credit cards are a lot less common and a lot of the arguments (car rental, building up of credit etc) brought forward by people living in the US just don't apply.  In fact especially airlines (and other merchants) will charge you extra when using a credit card instead of a debit card and this can add up fairly quickly. I hold a credit card purely for travelling outside the EU and occasionally I will travel for work and make my own arrangements, then it can come in handy as I am able to reclaim my expenses before I have to pay my credit card bill (in this case I will also claim the extra credit card fees from my employer). This however is for my personal convenience and not strictly necessary. (I could fill out a bunch of paperwork and claim the costs from my employer as an advance.) In the EU I find that if my VISA debit card will not work in a shop, neither will my credit card, so on that note it's pretty pointless. So to answer the asker question: If you live (and travel) in the EU  you don't need a credit card, ever. If you travel to the US, it would be advantageous to get one. Occasionally banks will offer you a credit card for free and there's no harm in taking it (apart from the fact that you have one more card to keep track off), but if you do, set up a direct debit to pay it off automatically.  And as other people have said: Don't spend money you don't have. If you are not absolutely sure you can't do this, don't get a credit card.

negative: They seem to agree in part with the opinion author on the suggested fix.   David Leonhardt(NYT Opinion Author) wrote:   > Different policies could produce a different outcome. My list would start with a tax code that does less to favor the affluent, a better-functioning education system, more bargaining power for workers and less tolerance for corporate consolidation  Whereas they wrote:  >Third, despite the rise in means-tested benefits—including Medicaid and the Earned Income Tax Credit, created in 1975 and expanded in 1986 and the early 1990s—government redistribution has not enhanced income growth for low- and moderate income working-age Americans over the last three decades. There are clear limits to what taxes and transfers can achieve in the face of such massive changes in the pre-tax distribution of income like those that have occurred since 1980. In our view, the main conclusion is that the policy discussion should focus on how to equalize the distribution of primary assets, including human capital, financial capital, and bargaining power, rather than merely ex-post redistribution

negative: Well, one can easily have rates below -100%.  Suppose I start with $100, and end up with $9 after a year. What was my rate of return? It could be -91%, -181%, -218%, or -241%, or something else, depending on the compounding method.  We always have that the final amount equals the initial amount times a growth factor G, and we can express this using a rate r and a day count fraction T. In this case, we have T = 1, and B(T) = B(0) * 0.09, so: So, depending on how we compound, we have a rate of return of -91%, -181%, -218%, or -241%. This nicely illustrates that:

negative: Definitely a scam. Don't call him or do anything. Stay calm, there is no damage done yet. I met someone online three weeks ago. ... Left his wallet, debit card, credit cards, drivers license, etc. in the room In the entire world its only you he can bank upon ... someone whom hes met online just few weeks ago; there are no relatives, friends !!! why would the hotel manager Fed-Ex or UPS the items to my home address ...  and not to his own address? Upon receipt, the engineer will give me his password to the Bank of America account so he can access his account Why doesn't he have internet? I am supposed to call him in the next hour or so and let him know if I will be doing this tomorrow. Don't call. Don't reply.  The $150 is just a starter bait to see if one is gullible enough to take it and then there is more and more by different ways.