5 Expenses You Didn’t Know Were Tax Deductible
Deductibles are often one of the least understood parts of doing taxes. At worst, people simply ignore them. At best, they let their local tax accountant in Ajax deal with it without giving the subject much more thought. If either of these extremes are the case for you, you’re missing out on great opportunities to lower your taxes even more. Knowing which tax deductions you’re eligible for and how to go about claiming them could save you a lot of money when tax season rolls around.
It might not seem like it but the Canadian government doesn’t typically tax your entire salary. Rather, they calculate your “taxable income,” which is less than your gross income. The government uses your taxable income to calculate the amount of taxes you owe. The rate at which they calculate what you owe is also subject to some variability depending on your unique situation.
Although many people confuse them and they’re similar in that they allow you to pay less, tax deductions and tax credits are a little different. A tax deduction decreases the amount of taxable income you have to report to the Canadian government. Tax credits on the other hand, are taken away from your tax liability. It may seem like only a small difference but depending on your tax bracket, the difference in what you owe can be large. There are so many tax deductions and credits that knowing which you should claim can be confusing.
What Deductibles and Credits am I not Taking Advantage of?
- Moving expenses: if you’re a student or you work from home you may be allowed to deduct some costs when moving. Similarly, if you’re moving closer to your new place of work it may count as deductible.
- Expenses if you work in the home: If you work at home rather than in the office for more than 50% of your time and if you have a space in your home devoted to making your income, expenses related to that space may be deductible.
- Pension income credit: The Canadian government treats income earned from a pension differently than regular income. If you’ve recently started earning income from your pension, be sure to check how much of it is eligible for a tax credit.
- Parking expenses: If your job requires you to regularly work outside of the office and you have to pay for parking while on the job, that can be deductible.
- Charitable donations: The main purpose of tax deductions is for the government to incentivize certain behaviours in the Canadian public. Charitable donations are usually deductible.
Tax Accountants in Ajax to Help You Maximize on Your Tax Credits & Deductibles
If you need a tax accountant in Ajax and surrounding areas, or would just like to know more about which credits and deductions you’re eligible for, contact us at Hurren Sinclair MacIntyre. We can guide you through the tax deduction process and let you know if you should be doing anything that will make you even more eligible for these tax breaks.