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Taxes

Taxes

Essential Tax Facts – A Great Tax Resource

Essential Tax Facts 2011 Edition: Simple Tips For Preparing Your 2010 Tax Return And Saving Money The Rest Of The Year by Evelyn Jacks

The 2010 tax season is upon us and as such I have decided to check out various tax books from the local library.  I stumbled upon a useful tax book by author Evelyn Jacks titled Essential Tax Facts. It looks like she updates her book every year.  As with every tax book you read, make sure it is relevant for the current tax year as some tax rules are bound to have changed since the previous year.

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January 22, 2011
Taxes

Read Smart Tax Tips Before Filing Your Taxes

Smart Tax Tips: Winning Strategies To Reduce Your Taxes by Grant Thornton

Before you file your taxes for 2010, I would recommend that you skim through Grant Thornton’s book titled Smart Tax Tips. The book is chock full of ways you can maximize your tax savings.

A major benefit to reading this book is to help you understand what tax credits and tax deductions are available for Canadians.  The book includes information about the Child Tax Credit, Disability Tax Credit, the Eligible Dependant Credit, and many more.   By reading this book you may discover a way to save a lot of money in taxes that you didn’t even realize was available to you.

The book also contains a lot of important information about Registered Retirement Savings Plans (RRSPs), including what happens if you overcontribute, how the carry forward rules work, etc.

There is also information about Old Age Security clawbacks, pension income splitting, and tips on how to effectively use a Tax Free Savings Account (TFSA).

If you have children, you will benefit from reading about what childcare expenses are eligible for tax deductions.  You might be surprised at how many expenses are actually eligible, even including some after school recreational activities if the fees are incurred in order to allow a parent to work.  It is worth your time as parents to dig deeper and minimize your tax bill.

This book is written to help out both young and old in managing their tax bill.  I would recommend this book to anyone interested in learning how to reduce their taxes and who wants to have a better understanding of our complicated tax system.  Be sure to select the most updated version of this book so you are reading the most accurate and up to date information, the cover will say that it has been updated for 2010.

January 18, 2011
Taxes

Make The Most Of Your 2010 Tax Return Before The End Of The Year

  • Review your stock portfolio. The markets did gain some ground in 2010 but many people are still facing capital losses on their investments from previous years. It is a smart strategy to review your portfolio before the year end to see if you can find a tax advantage in taking a loss or cashing in a gain. Capital losses can be carried back three years or carried forward indefinitely.
  • Taxable income:  If you have cashed in some of your RRSP, sold an investment property or received a lump sum pay out from an employer, you may want to do a rough calculation of your taxable income. All of these elements can impact your tax payable and you may be facing a tax bill. There may be ways to reduce your bill but you will be limited after December 31.
  • EI Benefits: EI claims may have gone down in 2010 but taxpayers collecting EI may want to review their tax obligations before the end of the year. In most cases, the tax withheld at source from EI benefits is usually insufficient to cover their actual tax liability when the benefits are added to other income earned during the year.
  • Pooling medical expenses: If you have an expensive trip to the dentist coming up, you may want to consult a calendar. Medical expenses can be claimed in any 12-month period ending in 2010 so it could be beneficial to try to fit known medical expenses into the same 12-month period in order to maximize your claim. You don’t actually have to go to the dentist but if you have an outstanding amount, try to pay the bill by the end of the year. Remember, medical expenses are reduced by a percentage of your income. So the greater their dollar value, the likelier it will be that you can make a claim.
  • Home Renovations:  You may have receipts from early 2010 that are eligible for the Home Renovation Tax Credit but you cannot claim them on your 2010 tax return. The HRTC was only available to be claimed in 2009. If you have eligible receipts, you will need to file an adjustment to your 2009 tax return.
  • Get organized: Trying to find all your slips the day before the tax deadline is never a good thing. If you haven’t already, start an envelope or folder to hold all your tax slips and receipts. You can still procrastinate until the last day but at least all your slips will be together.
  • Save for Higher Education: With tuition costs rising, many parents and grandparents want to take advantage of the government’s Canada Education Savings Grant (CESG). You must make a contribution to your child’s Registered Education Savings Plan (RESP) before December 31. The lifetime RESP contribution limit is $50,000 with no annual contribution limit. CESG matching contribution per year is up to $500, with additional supplements for lower-and middle-income taxpayers.
  • Making a difference: If you want to claim a charitable donation on your 2010 tax return, you have to make it before December 31. If you have already made more than $200 in donations in 2010 it will also be worth a 29 percent federal credit instead of the 15 percent for donations under $200. The good news is that now you can donate publicly-listed securities to registered charities or private foundations without being subject to capital gain taxes.
  • Moving to start a job in a different province? Check the provincial tax rates before deciding the moving day. You are subject to provincial tax in the province where you reside on December 31. So if there is a substantial difference in the tax rates, you may want to either speed up or defer the move.

 

 


October 22, 2010
Taxes

What Will You Do With Your Tax Refund?

It’s tax refund season again and it’s always nice to get some extra money back from the government.  We got a refund this year because we both contributed to an RRSP.  If we had not contributed to an RRSP, we would likely have had to pay taxes this year as our employers only take off the bare minimum required from our paychecks to cover taxes.

Getting a tax refund due to overpaying on taxes throughout the year is a bad thing.  It means the government has owed you money all year long and rather than it being in your bank account, the government has benefited from it.  One way to ensure that this doesn’t happen to you is to make sure your employer only takes off the minimum required taxes.  Some people opt for the maximum taxes to be taken off in order to ensure a tax refund at the end of the year.  I wouldn’t recommend this option unless you know that you are a horrible saver and this is the only way you can save.

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April 28, 2010
General

8 Things You Can Do With Your Tax Refund

1. Pay down high interest debt such as your outstanding credit card debt.things you can do with your tax refund As unappealing as this may sound, you will be much farther ahead financially the sooner you can get rid of your credit card debt or other high interest debt.

2. Put it toward your retirement savings, or if you haven’t started saving for retirement, start now with your refund money.

3. Build up your emergency fund. It is wise to have at minimum 3 months worth of monthly living costs saved up for a rainy day. Ideally, you should save 6 months worth.

4. Buy insurance that you would otherwise not be able to afford to protect your family in the event of illness or emergency. By using your tax refund, you don’t have to factor the expensive premiums into your monthly budget, making it much easier to keep your family protected without financial stress.

5. Service your vehicle. You may have neglected your car recently because you were strapped for cash. Now that you have the funds, take care of your car.

6. Do some home renovations that will increase the value of your home.

7. Put some extra money towards your mortgage. It’s always a great feeling when you can pay down your debt and think about how much interest you won’t have to pay!

8. If you have been really disciplined all year and already have an emergency fund and retirement savings plan in place, spend some of your tax refund on yourself! Enjoy a day at the spa or a meal at your favorite restaurant. Do something that you normally wouldn’t do and create a nice memory. Think of it as a reward for all of your hard work throughout the year.

April 29, 2009