Tuesday, 17 January 2012

Five Ways to Prepare for Tax Season

1. Spend one weekend getting organized
My advice spend a weekend to go though your important documents and receipts figure out what you can write off. Visit the Canada Revenue Website (www.cra-arc.gc.ca) to see if you qualify for any tax benefits and what paperwork you need to send to Ottawa.  You could save yourself hundreds of dollars by just being organized.

2. Hire a professional

An Accountant is up to date with on all the tax rules in your area. This will avoid costly mistakes like misrepresenting yourself or missing out an eligible tax incentive. Accountants know tax laws. They can help save you money by understanding new government incentives and tax rules

3. Decide if you should contribute more to your RRSP
The more you make the more tax you pay. By contributing to your RRSP you can bring your income down to a lower tax bracket, hence saving tax you would have paid and still having the luxury of having that money grow tax free. If you fall in to the highest tax bracket, ie: you're making $132, 406,  you should find out if you can still contribute to you RRSP. Your RRSP deadline for contributing to your RRSP for the 2011 tax year is February 29, 2012.

4. Income Splitting
You can reduce your tax bill significantly by implementing income-splitting strategies if your spouse is in a lower income bracket. When you retire and withdraw money from your RRSP you will be taxed.  By setting up a Spousal RRSP, you can transfer a portion of that income into your spouse's RRSP to be taxed at lower rates when it's withdrawn by your spouse and after age 65. The contributor to the Spousal RRSP is able to bring their room down and still enjoy the tax benefit of getting a larger refund.

5. Self Employed or Full Time
In either situation find out what incentives you are eligible for. Clothing, equipment, business expenses. Talk to individuals in your own field, they are your best resource.  This is when your accountant will come in handy as well. 

NOTE: Generally the deadline for the 2011 tax return is April 30th, 2012

4 comments:

  1. This website also has some great tips!

    www.canadataxonline.ca

    ReplyDelete
    Replies
    1. Sorry.... www.canadataxonline.com

      Delete
  2. Damian from Intuit here. Great post with great tips for tax time. For those that want to do taxes themselves, but have some questions and want some tax advice, this year TurboTax Canada is providing Free Tax Advice with all versions of TurboTax. Check it out: http://turbotax.intuit.ca/tax-software/free-tax-advice.jsp

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