By: Captain Number Cruncher
Before I went to become an accountant and take all kinds of tax, accounting, management accounting, cost accounting, business law, …. I used to think that taxes are so complicated. I never thought that I would learn how to prepare not only mine but all kinds of small business, charities, corporations, even scientific research and experimental development (SRED) tax credit.
For those of you who are brave enough and preparing yours, here are some tips, specially if you are self employed.
Tax Tip # 1: Ensure you have all your receipts
Be prepared, keep all your receipts, especially medical expenses, these could be for eye glasses, prescription drugs, chiropractors, psychologists, message therapy. Also if you have a specific diet, for example, gluten allergy, the excess of costs of grocery can be deducted. Other form which gets missed are for donations, kid’s daycare and child care expenses and professional fees.
One receipts that actually saves student a lot of taxes even into the future is T2202A. Universities or colleges used to mail these to students however, they don’t do this anymore so students have to login to their school website and print them. You can also print in PDF and save in Dropbox.
I have often seen some of my clients have missed them. Luckily when I prepare their taxes, I compare their deductions to prior year and can tell which ones are missed.
What I recommend: create a Dropbox and save them in there. When tax season comes all your receipts are kept in one place. Also if CRA ever asks, they are all ready. You can actually submit them to CRA online, if you have access. Also, if you decide to get your taxes done professionally, you can share the folder with your accountant.
Our clients love this feature since they can go back multiple years in Dropbox and retrieve their electronic copy of their receipts.
Tax Tip # 2: Employed and Working at Home
If your employer asks you to do some work at home either at night, weekends or regular hours, you can claim certain deductions. One important thing you need to is to have your Manager sign this form T2200 Declaration of Condition of Employment. CRA may ask to see this form. This form is especially useful if you deliver mail. In this field you are using your own car, which has some operating costs and the reimbursements form work may not cover all the costs. For employees who work at home you can deduct the costs of your home in relation to the space you occupy to do your work.
A lot of my new clients had missed this. Even when I was telling that they could claim certain deductions, they were not too sure however, they were delighted to see a higher tax refund.
Home office and other expenses may include:
Interest on mortgage
Insurance
Utilities
Travel
Tax Tip # 3: Self-employed
Well if you are self employed you are entitled to deduct costs that are associated with running your business. Basically means whatever you need to do to run your business. Some could be home expenses, if your office is at home, cell phone, car expenses, …. For this, I urge you to get a professional handle this. I have seen a lot of undeducted expenses. Actually want to test this theory, do it yourself and after see an accountant and compare the difference. The different can potentially pay for the accounting fees.
We were able to save as much as 4 thousand dollars for our clients.
Best tip for self employed is to get a cloud accounting system. Quickbooks Online now has a product for Self-employed individuals which is relatively inexpensive. As Elite Pro-advisors, we set up our clients on this platform and hook them up to receipt bank and this saves them hours and hours of work and record keeping.
Tax Tip # 4: Get all your credits
What I mean is for example, there is a credit for 1st time home buyer ($5,000 Credit, potential refund $750). You can use every 5 years. So if you bought a house 10 years ago and used this credit. You can use it again let’s say this year if bought a new house in 2018. When I find out that a client has bought a house recently, I asked if it was the 1st time, if not when did they purchased the previous one. So if you miss this before, contact us and we’ll try to recover the credit.
YourSavings.ca was not involved in the creation of this content. Information contained on this page is provided by an independent third-party content provider. YourSavings.ca makes no warranties or representations in connection therewith.
