Five Things to Keep in Mind Before Filing Your Taxes

  • By: mvadmin
  • Date: November 18, 2020
  • Time to read: 2 min.

Here are simple five tips to remember when getting ready for tax season.

The deadline for filing personal tax returns is on April 30, as the date approaches you must be preparing to get your things in order.

Here are 5 things you must know:

Learn the basics; don’t leave everything to your accountant.

It is important to know the basics of your finances; your accountant can only help with the information you provide them. Keeping an eye on your finances throughout the year is the key to being in control during the tax season. For example, penalties for not disclosing foreign assets worth more than $100,000 could be steep, and having a U.S. bank account could fall into that category. Tax preparers could miss out something like that if you don’t bring it up.

Stick to the deadline

You may feel you aren’t ready to file on the required date since you know you owe an amount which you may not have, but it is much better to file right away than have to deal with the penalties later.
Apart from the penalties being high, filing on time also makes it easier as the Revenue Agency can work out a payment plan with you.

Report other incomes

Many tax filers remain scared about reporting their additional income, don’t be. If you have earned some income running a small side business or doing some freelance work disclosing it to the authorities will make life much easier for you. Not only is it legally necessary to report that income, but the tax bill also doesn’t have to be large if you are reporting the expenses on the job as well. If your side business is not doing particularly, you can actually save tax, as the loss can be applied to reduce your other income.

Save the receipts

This one should be a no-brainer. Unfortunately, it isn’t. People tend to forget that medical expenses can give them a tax credit. Prescription medication and health insurance deductions can count towards medical expenses if these expenses are higher than 3 per cent of your annual income, then you can save on tax. Hence, saving all medical receipts is very important.

Research to find out new changes in claims and penalties

When medical expenses are claimed, having the relevant expense receipts are essential, people can also claim fees to certain licensed practitioners like chiropractors and naturopaths. However, supplements and medicinal herbs cannot be claimed. Another point to note is that the claim amount on children’s fitness has been doubled to $1000. Lastly, always remember than penalties get worse with time, so don’t misrepresent or hide any income.