Taxes can be overwhelming, because the filing process can be complex, and because of potential legal ramifications if done incorrectly. You also have expenses of your own to cover, and you may not have adequate funds after paying taxes. But you do have options, and these five tax-saving tips can help you cut down on tax costs.
Start A Business
Starting a business doesn’t mean that you have to leave your current employment behind, or devote all your time and energy to a new venture. This can be a small business that you do part-time. But if you want to make this your main source of income, this is another reason to pursue your dreams.
As a business owner, you can deduct certain expenses from your taxes. Items such as computers and home office equipment are examples.
Following this tip may also help you discover a new career path, and lead to other opportunities.
Invest
Investments, such as stocks and bonds, are an excellent way to build your wealth. These can serve as a passive income source and can be useful in financially difficult situations in the future. But investing can also be a way to keep your tax costs to a minimum.
This is true for instances of taking out loans and contributing to a Tax-Free Savings Account (TFSA). When you take out a loan, you can deduct the interest if you borrowed it for investment purposes. A TFSA is another viable option because your investments grow tax-free. While the contribution itself isn’t tax-deductible, the tax-free earnings can provide assistance when paying taxes. This strategy is highly useful in combination with the others mentioned here.
Contribute To Your Registered Retirement Savings Program (RRSP)
RRSPs ensure a financially comfortable future and have an advantage in the present moment. Your contributions are tax-deductible. However, this option is available to you up until December 31 of the year you turn 71 – afterward, you can only withdraw from your RRSP.
Split Your Income With Your Spouse
Income-splitting is a highly effective tax reduction method. This is encouraged for those who earn substantially more than their spouses. Here, one spouse transfers a portion of his or her income to the spouse with a lower income. You may also reduce taxes by contributing to your spouse’s retirement account.
Work With An Accountant
Accountants can be excellent tacticians when it comes to reducing tax costs. These are professionals who can help you discover subtle ways to minimize taxes, while also keeping you within legal boundaries. If you’re working alone, you risk being audited if you aren’t careful. Another helpful tip here is to get an accountant who works with individuals in financial circumstances similar to yours.
We’ll Keep Your Tax Costs To A Minimum
At Fidusure, we will take the stress out of tax season. We make taxes quick and easy, so you won’t have to worry about what you’ll have to spend. We do taxes the right way. Call us today at (647) 567-4702.