Filing your taxes can easily feel like a burden if you’re not familiar with the process. If you’re a Canadian citizen or resident, you are required to file a tax return every year, even if you don’t earn any income. This blog post will discuss five tips that will help make filing your taxes easier, from taking advantage of deductions as a business owner to hiring a tax accountant.
1. Work for Yourself
Working for yourself in Canada can reap a variety of amazing financial rewards, one of which is the potential to save money on taxes. Taking advantage of the tax credits and deductible expenses afforded by the government can be an effective way to reduce your income eligibility and leave you with more money in your pocket come tax season.
The Canadian government allows you to deduct certain business expenses, such as capital expenditures, start-up costs, advertising fees, home office costs, and many others, all of which can really add up. Beyond that, some provinces provide tax credits specific to self-employment ventures.
If you’re considering taking the plunge into working for yourself, make sure to research these opportunities thoroughly so that you’re taking full advantage of all the great ways government incentives can help pad your wallet.
2. Keep Your Important Receipts
If you are looking to save money on taxes, you should keep receipts and other important documents, such as bills. Receipts provide an audit trail that can be verified by the Canada Revenue Agency (CRA). This will help you prove any deductions you claim on your tax return, ensuring you save money while also staying compliant with CRA regulations. Additionally, working with an accountant or financial advisor to monitor your receipt collection and track deduction opportunities will ensure you’re maximizing your savings come tax season.
3. Maximize RRSP contributions
Taking advantage of Registered Retirement Savings Plan (RRSP) contributions is an excellent way to save on taxes. Contributing to your RRSP could help you live comfortably in retirement and lower your tax bill.
Contributions made to an RRSP prior to the March 1st deadline can be deducted when filing taxes for that calendar year, so now is the time to start planning to figure out just how much you could save on taxes by making the most of your RRSP contributions. Putting money into an RRSP also helps because it reduces how much you pay in income tax, allowing you to keep more of what you earn each year. Maximizing your RRSP contributions doesn’t take a lot of effort but can provide significant savings every year.
4. Claim Interest Paid on Student Loans
If you’ve taken out student loans, there may be ways to reduce the amount of taxes you owe. Depending on your provincial residency and individual circumstances, interest paid on student loans can be deductible when filing your income tax return. This deduction could save you a significant amount of money come tax season, so make sure to look into it before you file.
5. Consider Hiring an Accountant
There is no better way to ensure you’re filing your Canadian taxes correctly than by hiring a tax accountant. A professional tax accountant can review every aspect of your return and make sure you’re making use of all available deductions that are applicable in your situation. They’ll also give you specialized advice based on their expertise in current laws so you can plan ahead for next year.
Hiring a top-notch tax accountant will give you peace of mind knowing that the job has been done right and that all the deductions applicable to your circumstances have been considered. Plus, it may even save you time—rather than spending hours combing through pages of tax rules and regulations yourself, a professional can do the work in half the time.