With the tax deadline just about 2 weeks away now, one question that is sure to be on the minds of Canadians is whether or not they will have to pay back taxes or if they will be receiving a tax refund.
The latter of course being the better of the two outcomes, this is a good reason for taxpayers to look to increase their tax refund as much as possible. By doing so, even if a large tax refund is not in your future, at least you won’t have to pay as much back in the end.
With that being said, with April 30th fast approaching there is still some time to ensure you can maximize your tax efficiency as well as have a clearer idea of the nature of your tax returns this year.
Here are 3 ways to help you do just that.
1) RRSP Contributions
Since RRSP contributions are one of the most significant ways you can increase your tax returns, it makes sense that taxpayers use this to their advantage when compiling their tax file.
While the RRSP contributions deadline was March 31 2017 and no more contributions can be made, this can however, still give you an idea of how much you can expect to see in terms of your tax returns.
At this point in time, you can also use this information to make sure you are prepared for next years tax season and you are making the most of your RRSP contributions. Ultimately, you will want to pay close attention to the area of your finances and get a head start on contributing the largest amount possible for the next tax period.
2) Charitable Donations
If you have been making charitable donations over the course of 2016, you can also include many of these as tax deductions.
You will first need to determine how much of these are eligible for your tax credit you can turn to the CRA website to see the actual credit amount you can claim. For example, make sure the charitable donation has been made through a registered charity as well a donee who qualifies in this area.
Depending on the specific charity group, you will also need to identify it is from the federal or the provincial donation category, and the CRA website table can also help you with this step.
In order to maximize your tax credit in this area, it is important to note that you should look to claim more than $200 at a time. Therefore, if you do not have an amount above this value, you could instead look to claim this amount the following year. In terms of charitable tax credit donations, taxpayers can retroactively claim these amounts as far back as 5 years, so this is something to consider.
The good news here is, there is fortunately still time to add up your charitable donations and increase your tax refund wherever possible.
3) Advice from a Tax Professional
While you can use tax-filing software as well as filing your taxes yourself online, there is also something to be said for turning to a tax professional for all of your tax needs, especially if you have a more complex financial situation.
Of course, you also want to make sure the tax expert you go with is a reputable professional in this field, such as a registered accountant or a tax preparation specialist. While having a professional assist with your taxes is likely to be more expensive than if you were to file them yourself, one major benefit of having this support is that they can use their expertise to help ensure your tax file is completed with a high level of accuracy.
With that being said, the taxpayer is ultimately responsible for clearly and concisely communicating their financial situation to their tax professional so that their tax files are completed thoroughly. The goal of course here being to maximize their returns wherever possible.
In the end, it is important that the taxpayer find a tax profession they feel comfortable with, since disclosing intimate financial matters can be a highly sensitive subject and you definitely want to be sure not to miss anything pertinent to your tax file.
When all is said and done, hopefully you have already been able to increase your tax refund and will receive a sizeable amount this year. Of course, the major downside of not doing everything you can to maximize your returns can mean you will instead be receiving a tax bill.
If you are someone who has been struggling with your finances however, and hope to pay off your debt as opposed to have to add to your debt, then this reality should provide the added motivation you need to do everything in your power to maximize your tax returns this, as well as in future tax seasons.