5 Things you should know for your income taxes

18 June, 2014

It seems that everyone is offering tips on how to save taxes these days and the internet is giving everyone ample ways to get access to them – whether they are right, wrong, misleading, or great ideas. Sometimes the best place to get advice is from an expert, which traditionally is a professionally trained accountant.  Let us give you some great ideas to save money this year on your taxes and lower your reportable income.
1. Retirement isn’t as far away as you think – so find a way to contribute to your RRSP.
Tax rules allow you to deduct your contributions to your RRSP, but did you know that you can contribute up to $2,000 more than what you’re eligible to contribute to your RRSP without attracting the usual excess contribution penalty?  Even though you can’t deduct the $2,000 over-contribution, it could be residing inside your RRSP for many years, continuing to grow on a tax-deferred basis as long as it’s in the plan. That $2,000 excess contribution can be deducted in a future year when your actual RRSP contribution is less than the maximum you’re allowed to put in.  A strong financial plan with a tax accountant can really build you a strong financial plan through effective tax management.
2. No income = No return!
People automatically assume that if they have not generated an income they are not required to file a tax return.  Reality is you may be missing on some key savings areas. HST, Child Tax Benefits, Sales Tax Credits, and Property Tax credits can be missed if you do not file a income tax return.  Not to mention, that valuable RRSP tax room could be lost.  By filing your taxes and building RRSP room you can carry that forward for years when you are able to make larger contributions as your business grows.
T3. Don’t leave credits on the table.
Would you walk away from a candy machine or slot machine with credits remaining or would you get the full benefit?  The same can be said about about those valuable tax credits.  You can transfer some of these between spouses, allowing for a deduction to help lower the tax liability.  Student credits can also be transferred to a spouse, parent, or even a grandparent once credits are used to lower the student’s tax liability to zero.  Don’t let the government have your credits when they belong to you.
4. Tax Software – friend or foe?
These tax softwares are not a foe, but can be over relied on.  Reality is for simple, straightforward returns these are great tools and can be used efficiently and quite simply.  The  challenge is when you are self-employed, rental income, or multiple revenue streams.  How do you manage all this with a simple software?  You cannot, a pro will help bring the clarity you need to your tax filing.
5. Those medical expenses aren’t free!
My colleagues and I have often found that the most missed deduction is medical expenses.  People do not understand the various medical expenses as they automatically think of traditional expenses.  In some instances travel expenses can be included as part of the medical expense deduction.  It is also key to understand that medical expenses can be claimed by either spouse or partner.
There are so many potential ways to save on your tax liability and many do not realize the advantages.  A professional tax accountant can help you find the legal ways to lower your liability, which will allow you to maximize your savings.  Contact us today at NumbersPlus for an initial consultation and start your way on your tax savings journey.

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