Tax Preparation Tips
Personal tax planning involves strategically managing your financial affairs to minimize tax liability while staying within the legal framework. The goal is to minimize the amount of income subject to taxation, maximize eligible deductions and credits, and make informed decisions to enhance overall financial well-being.
– The Noseworthy Chapman Team
Helpful Links & Guides
RRSP Deadline February 29th, 2024
Registered Retirement Savings Plan (RRSP) is a tax-advantaged account allowing Canadians to save money for retirement. Contributions to an RRSP are tax deductible, resulting in immediate savings on your income taxes.
Spousal RRSP
A Spousal RRSP is a strategy that allows higher-earning spouses to contribute to their lower-earning spouse’s RRSP. The contributions help redistribute income in retirement, which can lead to further tax savings. The funds withdrawn from the Spousal RRSP are taxed in the hands of the lower-income spouse, reducing the overall tax burden.
Tax-Free Savings Account (TFSA)
The Tax-Free Savings Account (TFSA) is a Canadian government-sponsored savings and investment account that allows individuals to earn tax-free investment income. One of the primary benefits of a TFSA is that any income earned within this account, including interest, dividends, and capital gains, is not subject to taxation. In a TFSA, individuals can grow their investments without incurring taxes on the returns generated. 2024’s annual limit is $7,000.
First Home Savings Account (FHSA)
Revenue Canada has recently introduced a First Home Savings Account (FHSA). The FHSA provides individuals with a tax deduction, up to $8,000 annually to a lifetime maximum of $40,000, that can reduce annual taxable income. Like a TFSA, your investments can increase in value without paying income taxes on those returns. You can then use the accumulated funds to finance the purchase of a first home without paying taxes on withdrawals or repaying the amounts withdrawn from the FHSA.
Home Office Expenses
Home office expenses refer to the costs associated with maintaining a workspace within your home for business or employment purposes. These expenses can be eligible for tax deductions under certain conditions.
Vehicle Expenses
Leveraging deductible expenses is a strategic way to minimize your tax obligations. Did you know if you use your vehicle for work purposes, then you can deduct certain vehicle expenses on your tax return?
Commissioned Employee
Are you a commissioned employee? Did you know many of your home office, entertainment, travel, promotional, and vehicle expenses are tax deductible? Leveraging deductible expenses is a strategic way to minimize your tax obligations.
Rental Income
Do you have a rental property? Did you know you can offset your rental income by claiming eligible rental expenses? Leveraging deductible expenses is a strategic way to minimize your tax obligations.
Tax Credits
Using available tax credits to reduce the taxes you may owe is a great way to minimize your annual tax bill. Become aware of what tax credits are available. Don’t miss the benefits of available tax credits such as charitable donations, disability, training, digital news subscriptions, physical activity, medical expenses, first-time home buyers, and eligible tuition expenditures.
It’s essential to stay informed about these deadlines and any changes in tax laws that may affect your personal tax planning strategy. Consider working with a tax professional to ensure you meet all deadlines and take full advantage of available opportunities to minimize your tax burden.
Noseworthy Chapman has been a trusted partner to hundreds of businesses in the province for over 40 years. Contact us to see how we can make 2024 the most profitable yet.
