At the end of the financial year, you do not want to end up paying taxes more than what you owe. Paying more tax can reduce your savings. Savings are very important for businesses as well as from an individual perspective. In order to get more money back from your tax return, it is important to know the deductions that are available. Here are a few tips to help you get a bigger tax returns.
Donations made to tax-exempt organizations allows you to claim a substantial amount of nonrefundable tax credit. These organizations include non-religious and charitable organization, community groups, colleges, non-profit hospitals, etc. Donations made to these listed organizations will help you claim all or part of the amount up to the limit of 75% of your net revenue.
Work From Home
Small businesses that operate from home can avail several deductions. Internet expenses, stationery, rent, and other expenses you pay for your workspace can be deducted. As per Canada Revenue Agency (CRA ), work space in home expenses include the cost of electricity, heating, and other home expenses.
Your taxable income may reduce more when you avail tax credits as compared to deductions. These credits are available for a variety of things such as care of children and dependents, adoption of children, education expenses, energy-efficient home improvements, and much more. Earned Income Tax Credit (EITC) is a powerful credit which can shrink your tax bill and boost your tax refund considerably. However, the EITC is available to people with relatively low incomes.
Claim Medical Expenses
The non-refundable tax credit is eligible to be claimed against certain medical expenses not covered by your health benefit plan. Make sure to keep a record of receipts and prescriptions for any medical expenses incurred by you. Some of the medical expenses include fees paid to medical practitioners, ambulance services, attendant care fees, and certain chronic disease treatments to name a few.
Use the Right Filing Status
If you support a dependent or are a single parent, you may get deductions which are significantly higher than standard deductions and offer more favorable tax returns. Also, depending on your marital status you need to decide if the returns need to be filed jointly or individually. Usually filing returns jointly is beneficial. However, it is recommended that you consult a professional tax expert who will give you a better idea whether the returns should be filed jointly or separately.
These are a few tips to get more money back from your tax return. Filing your tax returns may be a time-consuming task. Therefore, it is advisable to contact a professional to help you save time and file your returns without missing out on any tax benefits.