Personal finance tips: Time’s up, tax-filing procrastinators | #Toronto

Personal finance tips

Time’s up, tax-filing procrastinators

Former dawdler Adam Salahudeen of Scotiabank offers his best last-minute filing tips

Dianne Nice

Globe and Mail Update

Adam Salahudeen never misses a tax-filing deadline. The senior manager of taxation advisory services at the Bank of Nova Scotia has a secret weapon.

“It’s called my wife,” he jokes. “My wife happens to be a chartered accountant.”

At tax time, there’s no searching through shoe boxes at the Salahudeen household. Every receipt and tax document is organized into three file folders: his, hers and the family’s.

 

Before marriage, however, Mr. Salahudeen said he was always a last-minute filer. “I can totally understand what it feels like.”

For those of us without an accountant in the family, Mr. Salahudeen offers up five tips for those filing at the last minute:

 

1 File – no matter what. File a tax return, even if you do not have any taxable income this year, because filing is the easiest way to establish your contribution room for the Tax-Free Savings Account (TFSA). Also, if you plan on applying for the Canada Child Tax Benefit (CCTB), you need to file a tax return in order to receive CCTB payments. You may also qualify for refundable tax credits, which have the benefit of being payable to you even if you have no earnings and have paid no tax. Also, if you’re a student and you don’t have any taxable income, consider deferring the claiming of student loan interest to a future year.

 

2 File on time. File your tax return on time, even if you cannot afford to pay the tax at the time of filing, in order to avoid the late-filing penalties. The late-filing penalty is 5 per cent of the balance owing, including an additional 1 per cent of the balance owing for each full month that the return is late, to a maximum of 12 months. If you owe taxes and are having a difficult time paying, filing on time will allow you to avoid incurring these additional costs.

 

3 Complete the RRSP repayment section of your return. Complete section 7 of your tax return to recognize any and all repayments to the Lifelong Learning Plan (LLP) or the Home Buyers’ Plan (HBP) to ensure you don’t lose any RRSP contribution room. If you forget to properly identify the RRSP payments as a repayment of the HBP or LLP, the Canada Revenue Agency will add the minimum payment that was required for the year to your income and, as a result, your RRSP contributions will reduce your unused RRSP deduction room carried forward.

 

4 Plan ahead. In the last-minute scramble to file this year’s taxes, consider steps you can take to avoid this same problem next year. It seems simple, but organization is important year round. So, avoid the shoebox mentality and create organized folders now so you will have a place to file your receipts.

 

5 Reduce next year’s refund. Once you have filed your taxes, if you are getting a refund you may want to consider reducing your deductions at the source to avoid the large refund next year. While this might sound counterintuitive, a large tax refund is not the ideal outcome of filing your taxes. A tax refund is money you have loaned to the government interest free. Why not put that money to work for you? By filling out the T1213 form to reduce your deductions at source, you can earn interest year round – putting more money in your pocket.

 

6 Claim tuition fees as a medical expense. Tuition fees may be eligible for the medical expense tax credit if a medical practitioner certifies, in writing, that the teachers or equipment and facilities provided by the educational institution are required because of the student’s impairment.

 

7 Claim any medical expenses on the lower income spouse’s tax return. The lesser of $2,024 (federal, for 2010) or 3 per cent of your net income is deducted from the medical expenses to determine the amount to be used for the available tax credit. Medical expenses incurred for the taxpayer, the taxpayer’s spouse/common-law partner and dependent children under 18 are claimed on line 330 of your tax return.

 

8 Claim private school as child care or a charitable donation. If they relate to child care services, a portion of private school fees may be considered to qualify as child care costs. Child care costs are claimed as a deduction from income on line 214 of your personal tax return. In most cases, child care expenses for an eligible child must be claimed by the parent with the lower net income for tax purposes. Also, special circumstances apply where all or a portion of the fees paid to a private school may be considered to be a charitable donation, and as a result, may qualify for the charitable donation tax credit. This applies to a school that teaches religion only, as well as schools that operate in a dual capacity of providing both religious and academic education.

 


Source:  Globe and Mail

Posted via web from Toronto Real Estate News, Blog

Advertisements

About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

2 Responses to Personal finance tips: Time’s up, tax-filing procrastinators | #Toronto

  1. i like this above all posts review about tax filing and claim about medical expenses, tuition fees and other.

    • Tariq Sultan says:

      @Denial Nichol: I’m really glad you liked this post, I will be posting more useful content on personal finance, stay tuned 🙂

      Best regards,
      Tariq

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: