I know what you’re thinking, didn’t we just do our taxes, well, yes, but it’s never too late to start planning now for the 2019 season. Maybe you weren’t as organized as you’d like to be, maybe you weren’t able to take advantage of certain deductions, such as RRSPs or employment expenses. Now is the time to think about these things rather than next April.
Start by having a specific drawer, or area of your desk that you keep all your tax receipts you get during the year and use an envelope in which to keep them. This is the best way to ensure you always have the receipts you need to file your taxes. As something comes in, put it in the envelope, and it’ll always be there when you go to do your taxes.
What Did You Miss Last Year
What deductions did you miss out on last year? Did you not make enough RRSPs? Maybe you could deduct your automobile for work but didn’t have all the receipts; or kept track of your mileage. Now is the time to look at where you are as far as RRSPs go and start contributing more. It’s much better to start contributing now rather than one lump sum come February as your money starts earning income right away.
For your automobile, start keeping your mileage now, and ensure you keep track of all work-related mileage. Every time you get gas make sure you get a receipt, same with any repairs you do to the car, and keep your insurance papers with the amount. If you haven’t kept your mileage until now, do the best you can to backtrack up to January 1st, that includes the beginning mileage for the vehicle.
What Couldn’t You Use Last Year
You may have had capital losses, from the sale of shares, etc., or non-capital losses that you just couldn’t use. If you feel there are shares you wish to get rid of this year, think about doing so to create a gain that you can offset with those losses (the opposite goes here to so if you have some lame-duck stocks and you know you’re going to have gains it may be time to get rid of them). If you had non-capital losses last year, you can carry them forward, to a year you have income. There are limitations so make sure you check them out.
Another thing you may not have used last year were moving expenses. If you moved later in the year or didn’t earn income from your new job or business before December 31st, you can carry forward these to the next year that you are actually earning income. CRA likes to see these expenses deducted from income you earned because of the move and in the year that the income was earned (as long as it’s the following tax year).
Donations can also be carried forward for five years. Donations are one deduction that are best done with a high value. $20 here or $20 there really doesn’t do much for your taxes. Donations work as a non-refundable credit and on the 1st$200 you get 15% of that or $30; over $200 you get a 29% credit. Therefore, it makes much more sense to accumulate your donations until you have over $200 (as long as it doesn’t take more than 5 years). If you are feeling philanthropic then your best bet is to give bigger donations to fewer organizations to take advantage of the tax deduction.
Medical expenses are another deduction that you can carry over to another year. For medical expenses, the end date must fall within the tax year you are filing for; for example, if you’re filing for 2018, then you can have March 2017 to February 2018. For 2019, you don’t have to carry on those dates, however, you would have to use March 2019 to December 2019.
Doing this split works well when you have a lot of expenses in one part of the year that fall into the next year. Let’s say you’re having a bunch of dental work that starts in November but won’t end until January of the next year at a cost of $10,000. You may be better off claiming it in the following tax year rather than the previous tax year.
The reason for a successful tax year is organization. The better organized you are and have everything ready to go, the faster your return gets done. It also makes your tax preparers life much easier too.
Personal Finance New Year’s Resolutions
Tips to Avoid Holiday Spending Mistakes
Cyber Monday or Green Monday – Will you be Shopping On-line?
When Should the Holiday Shopping Season Start?
Pros and Cons of Reverse Mortgages
Thinking About Taking out a Reverse Mortgage? Have you Done Your Homework?
How Much do you Plan to Spend Celebrating Halloween?
What to do When you Can’t Pay Your Bills