Sunday, April 25, 2010

Canadian Tax Deductions to Keep in Mind

Get ready, Canada – April 30th is rapidly approaching. As most Canadians are aware, this auspicious date heralds the end of the tax season for the previous year. It is your last opportunity to make any adjustments to your taxable income and, hopefully, reduce the tax due.

Tax deductions exist within the legal system to allow a degree of parity amongst taxpayers and create a balance between earned income and the relevant taxes. However, as most accountants will point out, although the government will allow you legal deductions on your tax return, they will not contact you to point out possible deductions that you missed claiming. Therefore, research and consulting may be worth money in your pocket.

Here are a few sample deductions you may have missed:

Certain adult family members living at home can reduce your taxable income. If you have a relative over 18 with a physical or mental disability, and they live with you, you can deduct more than $4,000 of your taxable income for the expenses incurred for them.

Do you work from home in your rented apartment? If you have dedicated workspace at home, and work there at least 50% of your time, a portion of your rent and maintenance expenses may qualify as a tax deduction

If you are required to use your own car for business purposes, and do not receive a nontaxable allowance from your employer, you can deduct a portion of your auto expenses including lease payment, loan interest, maintenance, licence and repairs.

Who ever thought that your hobby may be tax deductible? If you earn some side income from your hobby and travel in order to do so, a portion of the travel expenses can be claimed against your taxable income.

A person who drives for a living can claim a portion of their food expenses while traveling. Similarly, when you travel for work, it is expected that you need lodging and showers. These, too, are deductible expenses.

If you are filing a simple return, it may not be necessary for you to incur the expense of a professional tax preparer. The Canada Revenue Agency maintains a highly informative website. On the other hand, if you feel you may be missing something, consult with a professional. After all, as honest hardworking Canadians, we all pay our taxes. But, we wouldn't mind paying just a little less.

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