Change is a constant part of life. With each change, adjustments have to be made. Certain changes in your lives put you in a different tax category or changes how you need to file your taxes. Legally, you may come under different rules and requirements. There are tax advantages or credits that come with some of life’s changes. Below are a few events that can take place in your life where you may need some professional guidance with the filing of your taxes.
Selling or Buying a House:
If you itemize, many of the expenses of buying a home and paying a mortgage can be tax-deductible. If you sell your home, the government requires you to pay capital gains tax. What is deductible and what amount you will have to pay capital gains tax on is what you and your CPA will have to figure out. Besides, energy-efficient upgrades or the installation of medical home improvements may qualify for tax credits.
Moving to a Different State:
If you move to a different state, you will most likely have to fill out tax returns for each state. Income taxes are figured differently in each state. Some states do not require their citizens to pay income tax. Other states have flat rates or taxes are based on your income bracket.
Starting a Business:
Depending on the type of business and how many employees you have, you must make sure your accounting practices comply with what the government requires. Certain expenses can be tax-deductible and you will need a feasible procedure to keep up with them. Also, personal and business expenses need to be kept separate. Business taxes are filed on a different form, for starters. Business losses could affect how much you have to pay on income from other sources. Business owners are also allowed to depreciate equipment and buildings that deduct from the taxes they owe. Also, if you work from home, or your home serves as the headquarters for your business, tax laws allow you certain deductions.
You Inherited a Large Amount of Cash or Property:
Inheritance taxes can be very costly. Knowing the specifics can save you a lot of money. Making investments with money could save on paying taxes for the present. Knowing how to categorize inherited property will help in using them as a tax deduction.
Retiring changes your tax situation. Social security payments and pensions need to be counted as income. You will need to determine what tax bracket your total combined income puts you in.
If any of the above events happen in your life, visiting a chartered professional accountant of Canada can save you a lot of money and help you meet your new legal requirements. Your chartered professional accountant of Canada will understand how your particular situation and circumstances may qualify you for certain tax breaks and advantages.