The three questions you should ask a CPA
Vancouver: It’s almost the end of the year and it’s time to think about your taxes and how you can maximize your tax savings. Here are the three questions you should consider asking a tax expert to help you prepare for the tax season:
1. What year-end investment changes should I make?
If you haven’t maximized your TFSA contribution room for the 2018 calendar year, you should consider moving some of your money from your chequing (or savings) account into your TFSA account. For 2018, the contribution room is $5,500. Remember, your contributions to TFSA are not tax deductible and the contribution room can be carried forward indefinitely.
You should also look into your RRSPS. Check your RRSP deduction limit on your 2017 Notice of Assessment to determine how much you can contribute for 2018. If you have an employer matching program, you should confirm how much you and your employer have contributed to your RRSPS in 2018. If there is room left for contribution, consider making an additional contribution to your RRSP for the 2018 tax year. You can make an RRSP contribution and not claim a tax deduction in the same tax year. If you think your marginal tax rate will be higher in the future, you should consider applying the deduction in a future year.
2. What can I deduct on my income tax return? As a BC resident, you can reduce the amount of your provincial personal income tax you owe with basic tax credits. But if the total of these credits is higher than the amount you owe, then you won’t get a refund of the difference. Some changes from Budget 2018 include the replacement of the Infirm Dependent and Inhome Care of Relative Tax Credits with the B.C. Caregiver Tax Credit, as well as the elimination of the Education Tax Credit for 2019 and beyond. Remember, if you make regular charitable donations, be sure to keep a close record of all donations. Every dollar counts.
3. What records do I need to keep?
It’s important to keep organized records to make filing your taxes simple. You should make it a priority to keep good personal financial records and have a file that contains all your tax forms. In addition, use a financial management app to track everything you spend. That way, you are more likely to be able to maximize your eligible deductions, and ultimately reduce your taxable income, which will lead to less taxes owed. Remember, you want to keep your records for a minimum of six years. If you do your taxes yourself, be sure to visit CPABC’S RRSP and Tax Tips at rrspandtaxtips. com in February 2019 for updated tips on income tax filing for the 2018 tax year. Credit: Chartered Professional Accountants of British Columbia (CPABC)
Disclaimer: Tax rules relating to RRSP and tax tips are complex. This is not intended as tax advice, and you should not make tax decisions based solely on the information presented in these tips. You should seek the advice of a chartered professional accountant before implementing a tax plan or taking a tax filing position.