10 Tax tips you need to be aware of this tax season
Whether you do your own taxes this tax season or use the services of an accountant, do not forget to inquire about these commonly missed tax savings strategies!
1. Watch that mileage
You can deduct mileage driven for work purposes. Don't try and guess around tax time the entire amount of mileage you drove in the year. People tend to underestimate the kilometers they drove in the year and this leads to a lower deduction. Keep track of your mileage throughout the year as you drive them.
2. Meals and entertainment
Don't lose track of your receipts and miss the ability to deduct these expenses. Meals incurred for business purposes are deductible at a 50% rate. Smartphones can capture and store receipts that can be given to your accountant. Be sure to keep personal and business related meals separate
3. Home office expenses
A commonly misunderstood deduction. If you use a home office as your primary place of business, you can deduct portions of home insurance, repairs, property taxes maintenance and other direct expenses. One thing you will not be able to deduct is your mortgage payments. The deduction is calculated as the portion of your house used as the office as a percentage of total square footage of the house
Pro tip: Even the cost of a cleaning lady can be deducted. Also, if you rent your home, you can deduct a portion of the monthly rent
4. Medical expenses
The amount you can claim is tied to your income so the more receipts you have, the better chance you will see some tax savings. Receipts for alternative practitioners like acupuncturists, naturopaths and practitioners of traditional Chinese medicine can be claimed only in provinces where they are regulated. Amounts not covered by your employer health plan are medical expenses. And if you have to travel more than 40 kms to get healthcare, you can claim transportation expenses
5. Travel expenses
When you travel out of the city for business, you can deduct airfare, taxi rides, hotels, lodging and 50% of meals. Make sure to keep receipts for business travel
Pro tip: Transportation from your home to your office is not a business expense. Travel between the employer's offices, however, may be considered business travel If your company has more than one location, travel is treated as a personal rather than a business expense.
6. RRSP contributions
For Canadian residents- Check with your financial advisor to see if it beneficial to utilize your RRSP contribution room. The RRSP deduction can reduce taxes in the year by a noticeable amount. : A spouse in a higher tax bracket may consider income splitting opportunities for the future by contributing to a spousal RRSP. However, the contributing spouses are limited to their own personal deduction limits.
7. Lifelong Learning Plan
You can withdraw up to $10,000 per year without penalty if you have an RRSP to finance your post-secondary or postgraduate studies (to a maximum of $20,000). Students must be enrolled fulltime to qualify for the LLP, or have a written offer to participate in a full-time program. Spouses and common-law partners can use the LLP for each other's schooling. Once funds are repaid to the RRSP, a student can begin participating in the LLP again.
8. Student loan interest
If you have graduated or left school and are paying off government student loans, you can claim your annual interest as a tax credit. Interest on private loans or lines of credit don't qualify
9. Moving expenses
You can claim expenses if you move 40 kms or more for work or school. Besides the usual moving and transportation costs, you are also allowed to claim storage costs, up to 15 days of temporary accommodations, meals, the cost of cancelling a lease or selling your old home. The legal costs incurred in buying a new home can also be claimed, but only if you sold your old home as a result of the move.
10. Organize your receipts before you go to the accountant
The majority of accounting fees come from the accountant needing to organize the shoebox full of receipts you bring them at tax time. If you take half day to organize your receipts by category, you can cut your accounting fees by up to half.