If you've just prepared your tax return, you're probably reflecting anew on how much of your hard-earned money escapes you in the form of income tax — and what you can do about it (in a very legal and legitimate way, of course). Well, here's the good news: there are ways to help ensure a more profitable tax season this year if you start getting organized now. Here's how to get your dollars in order:
1) Check and review last year's return to ensure you won't miss out on any deductions and credits in the current year. Look at your carry forwards - your unused Retirement Savings Plan (RSP) and Tax-Free Saving Account (TFSA) contribution room - and do your best to fill them up fast to potentially reduce your taxes while enhancing your eventual retirement income.
2) Get organized by setting up a simple filing system and separating your information by type — income, deductions, credits and so on. Your tax tasks will be much more manageable in this way.
3) Keep track of all your expenses and retain receipts even though you don't necessarily have to submit them with your return. Don't forget moving expenses, accounting fees, investment management fees and the like.
4) Keep more of your paycheque by reducing payroll tax deductions. When you get a tax refund, it means you've paid the government too much during the year, providing them with a tax-free loan and reducing the amount of money in your hands that you can invest during the year. If you expect a fat refund next year, apply to your employer to reduce the amount of tax deducted from your paycheque. Then use that extra cash to invest wisely in your future.
Keep more of what you earn!
