In yesterday’s blog, we revisited the topic of filing taxes and how Canadians have been neither keen on nor skilled at doing them. According to Evelyn Jacks of The Toronto Star, there are a number of things that Canadians can do to ensure that tax time is not a hard time to go through. On the contrary, this time of year can actually be quite rewarding.
In fact, Canadians are missing out on the benefits of the season as many of them may be owed healthy tax returns. If only they would file their taxes properly! To assist with this, we reviewed a number of tips offered up by Jacks to help the nation get more money back from the government each year.
Picking up where we left off, Jacks writes that “another reason why home ownership is so attractive is that the increase in value of a property designated as a principal residence is tax exempt.” Reminding us that one’s RRSP can be used to save up to buy a house, she adds that when contributing to your RRSP, you are saving that money from being taxed to begin with.
Jacks also strongly recommends that you minimize the tax on severance payments. She writes that when leaving a job, a severance package can help with a “soft landing”, but they are fully taxable. One way to help reduce taxes is to increase your RRSP contributions. This seems to be a general rule of thumb.
Control credit crunches, she advises as well. Writes Jacks: “Make sure you take advantage of losses to reduce income. And get your investment priorities right: Don’t cash in RRSPs if you can help it—this will cause a tax problem next year. Be sure to see a financial and tax advisor for help with your planning.”
Jacks also notes that some people pay their income taxes in quarterly payments. She suggests that you find ways to reduce your quarterly installments. For some people, when they are making payments, they are doing so on a reduced income. In fairness, the payments too should be reduced.
Thankfully, the simple writing of a letter to request a revised billing based on your estimated income for the year is sufficient enough to have this done. After all, the objective is for you to not make less money than you did the previous year. The hope, of course, is that these tips will help you to gain money back from filing your taxes correctly.
We hope that, this year, these tips may help you reap the benefits of tax time!