This year's tax deadline is approaching. If you are starting to worry about the amount of taxes you’ll be paying and fretting that you may miss the deadline and have to pay penalties, this may been a good time to think about making next year’s tax return stress free. You can do by implementing five easy strategies for keeping more of what you earn.
1. Return to your return
Check your 2012 and 2013 tax returns for any deductions you might have missed. Look for carry-forward opportunities to fill unused Registered Retirement Savings Plan (RRSP) contribution room that could potentially reduce your taxable income. Your unused contribution room is on your notice of assessment from the Canada Revenue Agency (CRA).
2. Get organized - stay organized
If you prepare your own tax return, start now to logically organize all your tax information, making it easier to identify and take full advantage of every tax deduction and credit. It you use a tax preparer, being organized means your preparer will need less time to do the job, and that saves you money, too.
Establish a simple filing system that separates your tax information by type – income deductions, credits and so on.
3. Save all your receipts
Keep track of your expenses and know about every expense item that can significantly reduce your tax bite – including such often overlooked deductions as moving expenses, accounting fees and investment management fees.
4. Fatten your paycheque instead of your refund
Getting a big refund feels good – but you may want to think about putting more money in your pocket each pay period and sending less of it to the government. If you expect a refund next tax year, apply now to have your employer reduce the amount of tax deducted from your paycheque, keeping more of your money in your hands.
5. Make your payments on time
If you’re self-employed and required to make regular tax payment installments through the year, make them on time to avoid interest penalties. Also be sure to set aside enough dollars to pay any outstanding taxes due at the tax deadline date.
Starting early and being diligent about your tax life is important but it’s only one aspect of your total financial life. When you have a complete financial plan in place, it’s easier to keep everything on track and on target. That’s why consulting with your professional advisor will make sure all your tax-reduction strategies and overall financial objectives are in place and working for you.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.