As we head into tax season, it’s crucial to be aware of the tax-saving opportunities that many people overlook. Tax professional, Certified Financial Planner and owner of Organic Financial Solutions, Nicole Chamberlain, shares her expertise on how to maximize tax savings and prepare for a smoother filing process.
1. Don’t Forget About Donation Receipts
One common mistake that Nicole often sees is individuals missing out on donation receipts throughout the year. These receipts can be easily misplaced or forgotten, but they are crucial for claiming tax credits. A key tip is that donation receipts can be claimed by either spouse, and it’s typically more beneficial to claim them on a single return. Why? Because donations under $200 receive a lower tax credit than donations exceeding $200.
Moreover, if you’re making smaller donations each year, it might be a good idea to group them together and claim them in one year. Donations can be carried forward for up to five years, so you can combine multiple years’ worth of donations for maximum impact.
For 2024, the Canada Revenue Agency (CRA) has extended the donation deadline to February 28th, 2025, meaning that donations made in the first two months of 2025 can be included in your 2024 tax return. This extension was granted due to postal delays caused by a mail strike.
2. Don’t Miss Professional Fees Deduction
For those in regulated professions such as teaching, nursing, or financial planning, you can deduct the licensing fees you pay annually to maintain your professional status. However, many individuals in these fields fail to claim this deduction. So if you’re paying fees to a regulatory body, be sure to include this as a tax-saving measure when filing your return.
3. Plan Ahead for Tax Season
Tax season doesn’t have to be stressful if you start planning well in advance. One of the best ways to prepare is by creating a physical or electronic folder to collect all the receipts, slips, and documents you’ll need throughout the year. This will save you from last-minute scrambling when tax season arrives and ensure you don’t miss any important opportunities.
It’s also important to be aware of key dates, such as the RRSP contribution deadline. By planning ahead, you can maximize your RRSP contributions and reduce any tax liabilities.
4. Watch Out for Capital Gains Changes
A major topic for 2024 tax filers has been the confusion surrounding capital gains tax changes. In 2023, the government proposed increasing the capital gains inclusion rate to 2/3 for gains over $200,000. However, this decision was reversed earlier this year, and the CRA has decided to maintain the current 50% inclusion rate for capital gains.
If you have capital gains from investments or the sale of properties, be aware that CRA systems were temporarily not accepting these types of returns as of March 2024. However, the CRA has announced an extension for those filing returns with capital gains or losses, providing extra time until June 2nd, 2024, to file without penalty or interest.
5. The Value of Working with a Tax Professional
Navigating the complex tax landscape can be overwhelming, especially with so many changes year after year. Working with a tax professional, like Nicole Chamberlain, can provide peace of mind, ensuring that you don’t miss out on valuable tax-saving opportunities. One client, for instance, shared how they had always felt stressed during tax season, but after working with Nicole’s team, they felt comfortable and confident in their filings.
Nicole emphasizes that tax laws are constantly evolving, and having a professional guide you through the process can help avoid costly mistakes and help you make informed decisions.
Conclusion:
As we approach tax season, it’s essential to take a proactive approach to your tax planning. By staying organized, understanding key deadlines, and working with a professional, you can make the most of the tax-saving opportunities available to you. Whether it’s claiming donation receipts, deducting professional fees, or staying on top of capital gains changes, a little preparation can go a long way in reducing your tax burden.
If you’re feeling overwhelmed or uncertain about how these changes may affect your tax situation, consider reaching out to a professional to help guide you through the process.
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