Category Archives: tax benefits

How to Reduce Taxes

As working people ascend to higher levels of success, they will inevitably wish to maintain their financial earnings. This can be particularly challenging when tax season comes around. For this reason, many hardworking individuals are constantly seeking out various means of reducing their taxes and holding onto the money which they have rightfully earned.

Thankfully, there are a host of legal means which people can employ as they work to decrease their tax bills. The following options and tools may not have been readily available to them in the past. However, this knowledge and information will certainly prove to be beneficial in current and future times.

Look into Write-Offs and Deductibles

One of the easiest and most simplistic ways for people to reduce their taxes is by writing off expenses which qualify as deductibles, explains Entrepreneur. The majority of expenses which qualify as deductibles are generally professional expenses or closely related fees. Transportation, royalties, payroll fees, and other costs can be written off during tax season. However, applicable deductibles will vary from person to person, seeing as no two individuals have the exact same situation.

Not all expenses are deductible and, as a matter of fact, attempting to write off certain fees can actually garner legal trouble, affirms Cleveland 19. There are different ways to write off certain expenses and various situations which qualify. For the average individual who lacks familiarity with tax laws, this can be quite nuanced and complicated. Therefore, many people contract the services of accountants and tax specialists.

Delay Certain Payments

Another clever (and legal) way of lessening your taxes is by simply “deferring” certain payments, as stated by Kiplinger. Waiting until the new year to cash certain checks, billing clients towards the end of December, and delaying certain dividends can come in handy.

Individuals who are unsure of how to delay certain payments can consult financial advisors for advice which specifically tailors to their present situations.

Save Money for Retirement

Time affirms that individuals who put funds aside towards their retirement are able to qualify for what is known as a 401K “pre-tax.” In essence, putting aside money for this form of retirement allows people to withdraw the number of saved funds from what is considered as taxable income. Moreover, taxpayers are permitted to subtract a maximum of $5000 worth of funds within a traditional IRA.

To make a long story short, saving money for retirement really pays off when tax season rolls around.

A Final Word

Taking advantage of all legal means to reduce owed taxes is absolutely paramount. Many individuals may be shocked to learn just how many deductibles they can write off. Delaying certain payments and putting aside money into 401K and IRA accounts also wields significant payoffs. In some of the best case scenarios, hard-working people have been able to save so many funds in taxes that the government ultimately wound up owing them money!

 

Authored by Gabrielle Seunagal

What Self-Employed People Need to Know About Taxes

Virtually everyone dreads tax season and the inherent complexities which often accompany it. The process of doing one’s taxes have become so difficult that many people hire professional accountants or tax specialists to take care of the procedure. However, taxes are somewhat different for self-employed individuals and whether they choose to do their taxes on their own or employ the services of a professional, it is still critical for people in business for themselves to have certain tax-related knowledge.

Self-Employment Taxes Vary from Person to Person

The amount of taxes that self-employed individuals will have to pay depends upon many factors. Taxes for sole proprietors will vary from taxes owed by LLCs, S-corporations, etc. Another important factor is income. Generally, people who earn more money owe more money to the government, although deductible expenses and applicable tax write-offs can decrease taxes for self-employed persons.

The Balance moreover cites increasing one’s business-related expenses as the most efficient ways for self-employed individuals to reduce the amount of taxes that they owe to the federal government. There are many applicable deductible business expenses including, but not limited to, insurance, advertising, rent, security, travel, etc.

A full list can be viewed by clicking here.

Preparing for Taxes Can Make a Considerable Difference

According to TurboTax, one of the best ways for self-employed individuals to prepare for taxes is by using a Schedule C. Not only does this somewhat simplify the process of doing taxes, but it also allows the individual to see how much money they earned or lost. As a matter of fact, the use of a Schedule C is mandatory for sole proprietors.

Self-employed individuals are also advised to prepare for tax season by securing a personal tax ID number and a business tax ID number. This truly comes in handy if business owners are mandated to provide their employees with W-9 forms.

Finally, the use of online financial tools like Quickbooks and Mint are excellent for helping self-employed individuals track their income, business expenses, and growth. Each of the aforesaid elements will play an integral role during tax season.

Knowing Whether or Not You Fall into the “Self-Employed” Category

Believe it or not, sometimes people mistakenly classify themselves as self-employed when they are actually employees. This mistake can severely complicate the process of doing taxes during tax season.

According to additional reports from The Balance, the official definition of self-employed individuals reads as follows:

“If you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself self-employed.”

A Final Word

Tax season can be inherently challenging for even the savviest business people. This is why many people choose to hire accountants or tax specialists. Although this option is available and often advisable, self-employed individuals who have, at least, somewhat of an understanding of taxes will be infinitely better off than their completely unaware counterparts.

There are many benefits of being self-employed. As the world of work changes and evolves, going into business for oneself is an avenue that more and more individuals are venturing towards.

Authored by Gabrielle Seunagal

Money Saving Tax Tips For Canadians 2015-16

Canadian Tax

Are you ready to make the most out of your tax savings?  Though it might be late to be filling, for those Canadians who requested an extension on their taxes, these strategies and tax savings will prove to be more than beneficial.  We’re sure those who are self employed will find many ways to take advantage of these here too! Canadians who can, should claim as many tax deductions and credits as possible.  This will then potentially lower their tax burden at the end of the year.  Furthermore, the end goal is to make certain to avoid all the common misunderstandings, pitfalls and the limitlessness misinformation that does exist.  We will dispel some of this for you right here!

Now, before we actually start listing some of these tips, we want to point out a very important issue with financial gifts or benefits gained on your job.  Some Canadians believe these don’t have to be claimed, as they think they are non taxable.  Modest gifts from your employer might be okay to not claim, but if you’re receiving end of year bonuses that are above $500–and this is every year; these kinds of things have to be claimed.  If it was something like every 3 to 5 years, then you could get away with it.  Unfortunately, the CRA will pick up on discrepancies through audits and by other regulations.

Let’s take the time to look at some of the things you should do and some of those you shouldn’t do when it comes to your taxes and gaining those precious tax advantages!

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2016 Tax Season Tips To Make Finances Easier At The End Of The Year

1)  Don’t be afraid to accept a pay raise or another form of promotion

Just because you receive a pay raise or a promotion doesn’t necessarily mean you’ll be in a new tax bracket and have to pay more out in taxes at the end of the year.  In fact, the opposite might be true.  Too many Canadians are losing out on tax benefits by not accepting promotions and raises versus any truth to the latter.  Be proud of your work and your position and accept what you’ve earned!

2)  The CRA DOES reward honesty, so don’t hesitate to point out who might not be paying taxes the way they should

Reliable tips that the CRA receives do profit for some Canadians.  It was just a few years ago that the Canadian Revenue Agency put rewards in place for those who would report on others not properly paying taxes and such.  While it might feel like a snitch position–think about how it can keep you safeguarded when it comes down to auditing and other investigations!  Honesty really does pay off.

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3)  You can file your taxes online without paying more

So many Canadians believe that filing taxes online can lead to unexplained penalties and other unnecessary costs, but this isn’t true.  As long as you’re familiar with how to file taxes and if you have the similar earnings year after year, filing online can save you time and money.  The earlier you can get your taxes taken care of the better!

There are definitely more tax myths out here that intimidate and scare people for no reason.  Filing your taxes might take time, but it’s a necessary evil.  Knowing the facts about the CRA and how it all works makes everything even simpler.  With further investigation and educating, you’ll learn more tips and strategies that might be perfect for you!  If you haven’t filed yet, don’t wait to get that extension approval!