Do you want to get a better tax return next season?
It is time to strategize your way to a higher tax return and savings. The key is to plan early to score high on your tax refund. The simple way to save tax is to reduce your taxable income. But how do you do that?
Many of us perceive it to be a complex task, but it does not have to be. Consider tax payments as a way of saving money. You can look at it as a medium to compensate for the money you did not consider as your savings.
Let us dive right in.
You can, of course, file your taxes, but we recommend hiring a tax professional to file your return, which could be a certified tax consultant, tax specialist, or chartered accountant. Leveraging professional help can allow you to chalk out ways to maximize your returns.
There are a few ways to get tax incentives we should inform you. So, if you are interested in getting better tax returns in Canada, apply the following 5 top credits and deductions techniques.
1. Claim childcare expenses:
Childcare expenses are a deductible component of your taxable income. You could have been living with the parent of a child, your spouse, or a common-law partner. Here, the person with a lower income must claim the childcare expenses.
You can claim the childcare expenses for services such as
- Day nursery schools
- Daycare centers
- Boarding schools
- Day camps and day sports schools
- Babysitters giving childcare services
The maximum amount you can claim under the child care expense deduction is $8,000 for a child under age 7 and $5000 for a child aged 7 to 16 years.
2. Education deductions and credits:
You are eligible to claim the amount for the interest paid on your post-secondary education student loans. You can only claim an amount only for the interest you have not already claimed.
If you owe taxes, you can use this deduction. Or else, you can carry the interest forward. This way, you can apply the interest on your return now or for any of the next five years.
3. Claim the medical expenses:
You can claim several medical expenses as non-refundable tax credits for medical procedures such as ambulance service, cochlear implant, dental services, and more.
The documents you need to have handy for your medical claim are:
- Receipts with the name of the company to whom you paid for the expenses.
- A prescription from an accredited medical practitioner.
- Certification in writing from the medical practitioner to support your claim.
- Form T2201, disability tax credit certificate approved by the Canada revenue agency.
4. Claiming business expenses:
You can claim the amount of money you had spent to earn money from your business. The activities for which you can raise claims are advertising, business start-up costs, fuel costs, insurance, maintenance, repair, etc.
If you have been working from home, you can also claim for the home office expenses. You need to determine the method you would be using so you would be able to claim for expenses you paid while working from home.
5. Apply for claiming the homebuyer’s amount:
You can claim the $5000 homebuyer’s amount if you have bought a new home. The condition is that you must not have been living in any other house owned by you or your spouse for the previous four years.
The amount of each of the expenses mentioned above may vary. So, for your good, get into the habit of storing all receipts, medications, and bank statement records.
There are efficient ways to boost the sum of money you receive from the government as a tax refund. The key is to understand and optimize your expenditure to maximize your refund. You can now get better tax returns by claiming for the expenses listed above.
If you want to get a hold on your expenses by creating a budget, then have a look at ’11 Practical Budgeting Tips’ and start saving your money.