I am by no means a tax expert but this is what I understand. You should receive a 1099 from the govt that explains all of this as well. basically if you are planning to file jointly add your net benefits and any other total income including your spouses income (do not adjust for deductions), and any tax-exempt interest - if it more than $32000 you may need to pay taxes. If you file separately do the same as above but would not include you spouse's income and if it is over $25000 your benefits may be taxable.

Hi Jock Ewing, Being a furriner - I have no useful advice to offer regarding your Incentive funds, tax refund, etc. ... sorry about that. However - I'm with dadoes ... wouldn't it be a good idea for you to plan to reduce your tax refund to close to $0.00? Over the years that I've worked as a personal financial advisor, one of my major suggestions to clients and others was that they reduce their income tax refund to $0.00. Even at low rates of interest ... money in your bank account does develop a small amount of interest, during the year and a quarter to a half or so that some of it would be there. I'd like to suggest that, during the year while your extra large withholding is being held back and sent to the IRS as an interest-free loan, you check with your bank as to the amount of interest that the extra amount withheld would have earned. Then when you receive your tax refund, suppose you take an equal amount and, in the presence of your family, throw it into the street. Do you figure that they would, on the strength of that act, judge you to be a wise manager of money? Not only are you losing the small amount of interest (let's call it a "pittance") that that amount of money would earn if you'd taken it and put it into a separate and inviolable bank account ... it would have been available in case of need to deal with a major emergency expense. The IRS wouldn't have been too sympathetic had you, facing such a need, asked them to pay you a portion of that potential refund during that year. Which relates to another major suggestion that I made to my clients ... that they try to have at least 3 months' income available in easily accessible asset in case of an emergency. With six months', nine months' or a year's amount being built up in case of substantial unexpected need - including, in recent years, a possible extended period of unemployment. I shared with a number of them the information that I often did not have that on hand myself during my years of recent employment, as I held a "credit" (really "debt") card with, usually, zero or almost zero owing, with full amount paid off monthly prior to due date, plus a line of credit at the bank, usually sitting unused (with no set-up or maintenance fee if unused) which I could draw on to pay off the credit card balance due after use to cover an emergency. Actually, I recently signed up for another card, with 1.9% interest rate for 9 mos. on transferred balances, to use to purchase stock, should I so choose, as I would have to pay 5.00% currently on my line of credit but can buy the stock using the first card, then transfer the balance. But - the first card will charge interest at regular rate (about 18%) from the date that I draw on it till the date that it moves to the second card. By the way - I'm 80 and live on less than the income from my three pensions (one governmental with residence requirement, so housewives qualify, a second contributory related to my former income, and a third private contributory one) plus a small annual required amount of withdrawal from a tax-deferred retirement account. That income is much more secure that most employment income, as all that I need do to qualify is ... ... stay topside the grass! Which makes my pension income almost a guaranteed income (as long as the private carrier and the government stay solvent - and ours is a lot closer to that than yours). Do yourself a favour, Jock, please - set up a bank acocunt that you promise to leave alone except in case of extreme emergency ... and deposit the amount of withholding overcharge from every paycheque. With a name such as yours - you may have a drop or two of Scottish blood in your veins ... and you know their reputation for being careful with the use of money. Good wishes for what's left of winter, the spring - and the rest of the year. ole joyful

After I'd bought some equity-based mutual funds, for that fabled "diversification", I decided that I didn't like the fees that I was paying to the managers - darn near as high as the income tax that I paid on on the average rate of gain (but some of the growth was deferred until I sold, of course). By the way ... when you own mutual funds that produce capital gain, in a regular account (not one of the tax-deferred retirement account ones) you must keep track of not only what you paid in the first place, but add all of those payiouts that they reported to you from time to time, usually annually, as the years went along, as they were reinvested. When you sell, your "cost" (for calculating capital gain) wasn't just the amount of your original investment, but included all of those distributions, that were reinvested. If you don't add those (usually annual) reinvested amounts ... you'll be paying tax on them twice - if they're outside of a tax-deferred retirement account! I decided some time ago that I prefer to buy individual stocks myself. On some of the stocks that I own, I used to be taxed at a low rate on dividends, and that rate was reduced even farther, recently. If I earn those dividends in a tax-deferred retirement account, I have no tax liability on the dividends currently, an advantage. But ... when I cash out, I pay tax at regular rate on every dollar ... so I lose the tax advantage that I would currently enjoy if they were taxable now. When I borrow to invest, for solid stocks, aiming at the long term - to fund that retirement - I use the current dividends that the stocks bought with the borrowed funds produce, plus some of the ones earned by the shares that I'd bought with my cash, to pay the interest on the loan ... and that interest is deductible. So I end up paying next to no tax on those dividends, or even gain a bit. When I take money our of my retirement account - taxed on every dollar, at full rate. When I sell some of my regular stocks (the non-tax-deferred-retirement-account ones), I deduct the amount that I invested originally (plus the reinvested dividends, if I have been using a dividend-reinvestment plan) anddeduct that from the amount of the proceeds of sale to find tha capital gain. I pay at regular rate on half of that capital gain ... but I get half of it free of tax. It makes sense, in this country, to keep bonds, GICs, etc. where the number of dollars originally invested won't grow, and the regular earnings are interest, that's taxed at top rate, in those tax-deferred retirement avccounts. Not equities, and certainly not Canadian equities. I'm nearing 80 years of age, and I have about 80% of my assets in equity-based investments ... and that suits me well. Good wishes to you for increasingly wise use of your income ... plus assets. ole joyful

Things are being misunderstood here. Don't panic. The idea that this rebate will be taken out of your next year's refund ??? No. Do you realize how many people don't get refunds? because they don't believe in having money held by the goverment for a year, with no interest, and so they underpay during the year. For accounting purposes, the rebate amount has to be recorded, and balanced. Too late to have it represented on this years tax forms (for Y2007), and you will recceive it in 2008. So, it has to be reconciled on the 2008 return, and that will be done by filing it as a tax credit (a tax credit is a subtraction from taxes owed). Another way to say it is that the rebate is a new tax credit which you are getting now and will be reflected on your 2008 return that you file in 2009 (i.e., it will show as a credit on your 2008 return, but then will be balanced by the payment that the Government has already made, for a net of $0).