Tax Savings Tips for the New Year

January 16, 2013

Tax Savings TipsTax season is beginning and it’s time to get organized and be prepared for tax filing. These tips from ComparaSave.com will help Canadians understand the benefits available that may not necessarily be explained when filing taxes.

There are many eligible savings that may be overlooked when filing taxes. It’s important to understand what these potential savings are in order to obtain a better return or alternatively paying less in taxes. These tips from ComparaSave.com will help Canadians be more aware of savings for tax purposes.

Registered Retirement Savings Plans

Canadians are able to contribute approximately 18% of earned income from the previous year. By contributing to RRSPs, it will deduct the contributed amount from yearly income. If a contributor does not make the maximum allowance, the balance of unused contribution room is carried forward. This allows Canadians to make up for the years that they did not maximize their RRSPs. Review notice of assessments for more details on contribution allowance. For first-time home buyers, RRSPs can be used towards the down payment of the home.

Investments

If there are any capital losses from buying or selling shares within an unregistered account, these can be applied against capital gains to help reduce income earned from other investments.

Marital Status

Taxpayers who are single, divorced, or separated with children are entitled to claim up to $10,527 per child, per tax year. That is significantly higher that a tax credit for a dependent child which is $4282.

Children

Any child care expenses including daycares or nannies, typically must be claimed by the parent with the lower net income, and are eligible for children of six years of age or under. If a nanny is employed, be sure he or she reports the income; otherwise no deduction can be made.

Medical Expenses

Medical expenses that are non-reimbursed are eligible to be claimed. This includes presciprtion medication, dental surgeries, or laser eye surgeries. Medical expenses that total more than $2,032 or 3% of one’s net income is eligible to be claimed.

Charitable Donations

Charitable donation receipts are income tax deductible, and can be carried forward and used in another taxation year.

These tips may help with obtaining a better return when filing taxes or lower the tax owed in the least. ComparaSave is dedicated to help Canadians save money on their major household expenses and help find consumers lower mortgage rates, insurance quotes and credit cards.



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