4 Things You Should Do Now So You Can Save on Taxes in the New Year

4 Ways to Make Sure Your Taxes Are Ready for 2019

With all the hustle and bustle that’s synonymous with this time of year, it’s important to also take a closer look at your personal finances before heading into 2019 – and we’re not talking about holiday budgets. Yes, most Canadians are busy with Christmas shopping and festivities, but soon enough, it will be time to file our taxes again. So make sure your money matters are in order and you’re not leaving any money on the table in 2018 with these tips…

Sell your losing investments

If you want to claim capital loss on your 2018 tax return, you have to sell any losing investments by December 31. Capital loss is loss that impedes on a capital asset. This asset could be an investment, like stocks or bonds or real estate. But you cannot claim capital loss until you sell that asset. If you are confident that selling your losing asset is the right choice, and it is held outside of a registered account, do this before the last day of 2018 so you can offset some of the income tax you pay.

Top up your RESPs

You can take advantage of the 2018 Canada Education Savings Grant (CEGS) when you file your taxes next year, as long as the money is in the beneficiaries’ RESP by December 31. The lifetime maximum amount of CESG a child can get is $7,200. But annually, that amount is $500 (or 20 per cent of the money you put in up to $2500).

And the earlier you get that money in the RESP, the longer it has to grow. Remember, gains made on investments sheltered inside an RESP are tax free, until the beneficiary withdraws it to cover educations costs.

Calculate your 2018 business expenses

For anyone who is self-employed and incurs expenses to run their business, you may want to gather your receipts from the year and calculate all your expenses from 2018. You can use those expenses to lower your reported income, and therefore, pay less income tax when you file your taxes. This makes the most sense for any self-employed person who has particularly made more than previous years and is worried about having a big income tax bill come spring. Calculating your expenses may be a tedious task, but might as well take advantage of the tax savings!

Think of your health care costs

If you are disabled or taking care of an infirm person, you’ll likely be eligible for the disability tax credit (DTC). It is a non-refundable tax credit that helps persons with disabilities or their supporting persons. So if you have expenses as a result of your disability, this credit can be up to $8,000, but the expenses had to have occurred in 2018.

Other ways to save

Some other quick tips to save on your income tax bill in the new year: Make any charitable donations by the end of year. Or if you need to make a big purchase for your business, do so this month to enjoy the benefit of accelerated capital cost allowance claims.

But if any of these deductions confuse you, or your tax situation is complicated, it’s may be wise to talk to an accountant before the end of the year to make sure you are taking advantage of every tax benefit possible.

Related Topics

Banking 101 / Economic News / Lifestyle / Personal Finance / Personal Finance News / RSM News / Taxes

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