Overcontribution Tax When Your TFSA Is Worthless? You MUST Avoid This Scenario

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When you overcontribute to your TFSA, there is a penalty of 1% per month. In normal circumstances to avoid a long-term penalty, you would have to withdraw the overcontributed money from your TFSA, along with any gains you made from that overcontribution. However, what if the value of your TFSA dips dramatically due to a poor investment?

You may not be able to withdraw your 'overcontributed' amount if there isn't any actual value in your TFSA! This would result in being penalized until you accrue enough contribution room in the subsequent year(s) to 'pay off' your overcontributed amount. We want to avoid this harsh punishment at all costs, so make sure you get a very good understanding of your contribution room prior to contributing to your TFSA.

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TIMESTAMPS:
0:00 - Introduction
0:40 - Overcontribution Penalty
1:21 - Waiving Your Tax Penalty
2:05 - What If Your TFSA Is Worthless?
6:27 - Utilize Your TFSA!

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DISCLAIMER: This presentation is for informational purposes only and should not be considered financial, investment, tax, or estate planning advice. All investments carry risk, and past performance does not guarantee future results. Any forward-looking statements are based on assumptions and may not reflect actual outcomes.

The content on this channel is for educational purposes only and does not provide specific investment or planning recommendations. Viewers should consult a qualified professional for retirement, tax, or estate planning guidance. Parallel Wealth and Adam Bornn are not responsible for any decisions made based on this content.