Tuesday, April 28, 2009

CBC Radioactive - tax time! 10 Ways to Cut Your Tax Bill and more!

Yesterday on CBC Radioactive, Peter and I discussed the often stressful time known as tax season. Fear not. CRA might seem like a scary tax monster, but armed with the right knowledge, you too can sail through your tax return without raising your blood pressure!

The deadline for filing your personal tax return is midnight on April the 30th. If you're self employed, you have until midnight on June 15th. However, if you do owe money to the government, you'll have to pay interest on that amount from April 30th. If you fail to file on time, get it in as soon as possible. The penalty for late filing is 5%, plus a whopping 1% per month (assuming you owe money).

If you do in fact owe money this year and wonder what can be done, well, nothing really. However, start planning this year for next. Here's a few things to keep in mind that may generate a refund or axe your tax bill for next year:

1. Invest in your RRSP. Even a small amount of $20 a week can add up to over $400 in deductions for the year and plus, you're investing in you!

2. Donate. The charity and you win with a tax credit!

3. Education. Investing in yourself can save you on taxes!

4. Private health plans. Get covered and get a tax break too.

5. Start an investment portfolio. Outside of an RRSP, investments are taxed differently. Look for investments producing a capital gain or dividend and keep those interest bearing investments in your RRSP as they're taxed at the highest rate.

6. Start a business. A little moonlighting and a home office could make some of your normal expenses tax deductible.

7. Consider rental income. With Edmonton's garage and basement suites initiatives, you could earn some extra monthly income while writing off a percentage of your household costs. Remember to use up the Home Renovation Tax credit this year too! (See the end of this post for resources.)

8. See if expenses on the job are deductible.

9. Consider giving assets to a lower-income dependent - but be sure to consult a pro for advice.

10. Last but never least, get a tax professional on your site. The money that you could potentially be leaving on the table or paying to Revenue Canada is well worth the investment in their advice.

Source: www.ptccanada.com

For more tips on understanding your taxes and even more money saving tips, check out this link on my website - http://www.kelleykeehn.com/financialresources(New).html

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