Ease your taxes with these timely tips
While tax planning should be a year round activity, time is running out to maximize tax savings for 2010. Here are some tax tips you could implement prior to year end to help minimize your income taxes.
Tip #1: Make charitable donations by December 31, 2010
When your total donations for the year exceed $200, you save tax on this credit at the top marginal rate. Donations of spouses can even be combined to maximize the credit.
Tip #2: Be aware of the various tax credits and deductions that apply to you.
Save your receipts from expenses like child care, moving and alimony and deduct them from your taxes. You can also reduce your tax bill by making use of tax credits like those for medical expenses, political contributions, tuition, education and textbooks, and children’s fitness.
Tip #3: Save tax-free: Contribute to a Tax-Free Savings Account (TFSA)
The contribution isn’t tax deductible but income and capital gains inside your TFSA are tax-free and so are withdrawals that you can make at any time for any purpose. Amounts withdrawn are added to your TFSA contribution room for the following year.
Tip #4: Maximize education savings
Though it may not reduce your taxes this year, if you make RESP contributions prior to year-end, it will help maximize the Canada Education Savings Grant* your child is eligible to receive this year.
Good tax planning can result in many benefits including increasing your cash flow, retirement savings and net worth. Call us before year-end; a little tax planning can go a long way.
* The Canada Education Savings Grant is provided by the Government of Canada.
Get moving!
If you’re moving to a province with a lower tax rate, do it before December 31 and you’ll pay the lower rate for the full year. If you’re moving to a province with a higher tax rate, try to delay until 2011.
Make the decision to make your RSP contribution now!
The RSP deadline may be months away, but why wait? Here are four good reasons to get your RSP contribution out of the way now instead of at the eleventh hour.
- Avoid the lump sum scramble with a regular contribution
Coming up with a lump sum can be tough. The easier and much less stressful way to save and grow your money is by contributing to an RSP year-round. Contribute to an RSP on a monthly, weekly, or quarterly basis directly from your bank account by establishing a pre-authorized contribution and avoid the last-minute rush. - Compound your contribution
A regular, ongoing RSP contribution gives you the benefit of compounded growth, which means you should end up with more money for retirement than if you just contributed a lump sum at the deadline date. - Contribute before the cash crunch of the holiday season
The various holidays in December can definitely leave you still celebrating the season with bill payments in the months that follow. Make your contribution outside of this potentially costly time of year instead. - File return early
An early contribution means you can also expect to receive your RSP tax receipts earlier. You could then file your tax return earlier and, if you’re expecting a refund, have it in your pocket sooner.
We can help you make the most of your contribution. Talk to us today to start planning your contribution well in advance of the deadline.
