Wednesday, March 12, 2008

Tips for Tax time


With just a few more weeks to go before the April 30 deadline for filing your personal tax return, you can still be rewarded with a lower tax bill if you pay careful attention to all the available deductions and credits and how you claim them.

Here are some practical tips to help you reduce your tax bill.


Tax Filing Tips





  • Are you an investor?
    You may be able to claim deductions for:

  • Interest — If you've borrowed money that you're using to earn income from a business or property, such as common shares bought on the stock market, the interest you pay is generally deductible.
  • RRSP contributions — If you made an RRSP contribution by March 1, 2008 and you have enough RRSP deduction room, you can claim the deduction on your 2007 income tax return or carry it forward, if doing this will benefit you more.
  • Small business investment losses — If you or your company invested money in an unsuccessful "small business corporation" and you now have a capital loss on shares of the corporation or debt it owes you, the losses may qualify as "allowable business investment losses". Unlike other capital losses, this type of loss can be used to reduce income other than just simply capital gains, such as employment or investment income.

Are you a commuter?


  • Commuters' tax credit — If you kept your monthly transit passes for travel after June 30, 2006 on local or commuter buses, subways and trains, remember to claim the new transit pass tax credit on your 2007 personal tax return. You may be able to claim the credit for monthly passes used by your spouse or child under 19.

Are you a business owner?


  • Self-employment expenses — If you're self-employed, make sure you take advantage of all the business-related expenses that you can claim to reduce your taxes. These include automobile expenses, parking fees, business association fees, entertainment costs, convention expenses (a maximum of two per year), cell phone bills, depreciation on your computer and salaries paid to assistants, including family members. Remember that in most cases, you can deduct private health care premiums as a business expense instead of as a medical expense.


Are you an employee?


  • Employment tax credit — If you are employed, remember to claim the new employment tax credit on up to $250 on your 2006 tax return to help cover your work-related expenses.

Do you have a family?


  • Child care expenses — If you have qualifying child care expenses, you may be able to deduct $7,000 for each child under seven and $4,000 for each child aged seven to 16. The expenses have to be made to allow you or your spouse to work, carry on business, attend school or carry on grant-funded research. Usually, the lower-income spouse must claim the deduction.
  • Charitable donations — If you're married, don't claim charitable donations separately — combine them and claim them on the higher-income spouse's return. The receipts can be in either spouse's name. If you donated public company shares to a charity after May 1, 2006, you will not have to pay tax on any capital gain on the shares.
  • Pay your spouse's tax bill — If you earn income in a higher tax bracket than your spouse, consider paying your spouse's tax bill with funds from your own separate bank account. This will leave your spouse with more funds of his or her own for investments, on which he or she will pay a lower rate of tax than you would.
  • Transfer your credits — If claiming certain non-refundable credits has reduced your federal tax owing to zero without using up all the credits, you may be able to transfer the unused amount to your spouse. Credits for charitable donations, tuition fees, education amounts, the age amount (for people over 65) pension income credits or disability credits can be transferred to your spouse's return, as long as you've used as much of them as you could.

Are you a student?


  • Textbook tax credit — If you're a post-secondary student, you may be able to claim a new textbook tax credit on the amount of $65 for each month of 2007 that you qualify for the full-time education tax credit or $20 for each month you qualify for the part-time education tax credit. If you can't use all of this credit in 2007 you can transfer it to a parent or spouse or carry it forward indefinitely.

Did you move during 2007?


  • Moving expenses — Moving expenses are often overlooked as a deduction. If you started working at a new location of employment or started a new business in 2007 and you moved to a home that is 40 km closer to your new work location than your old home was, you may be able to deduct many of your moving expenses, providing that the expenses were not reimbursed by your employer.

Do you have medical expenses?


  • Medical expenses — If your family has medical expenses totalling more than 3% of your net income (or more than $1,885 if your net income is over $62,833), you may be able to claim a federal tax credit for all qualifying expenses above the threshold. Keep in mind that you can claim your expenses for any 12-month period ending in 2007 on your 2007 return. The list of qualifying expenses is long — check the CRA web site for more information.

Can't afford to pay your tax bill?


  • Reduce late filing penalties — File your return on time even if you can't pay the balance owing. Doing this will eliminate the 5% late-filing penalty, though you will still have to pay interest on your balance. If you can't file your return on time but you know you owe taxes, making a payment by April 30, 2008 will help reduce late-filing penalties.



Read more about:Homes for Sale



Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,


Mark


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate


Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987

( BUS 905-828-3434
mark@mississauga4sale.com
8 Website : Mississauga4Sale.com


Homes for Sale

No comments:

Post a Comment