Reducing your personal income taxes is quite tough, especially if you don’t have the knowledge of some useful ways to lower your taxes. We all know that taxes are inevitable, but our accountant in Summerside can help you manage your personal taxes well. Sharon R. O’Halloran, C. G.A, Inc. in Summerside, PEI will help you manage your financial matters as well as grow your small business successfully.
It is very important that you understand the fact that taxes are not based from gross income but on the taxable income which can be reduced through write-offs or deductions. The following five useful tips on reducing your personal income taxes from our accountant in Summerside will greatly help you by:
Feeding the RRSP – Lower your taxes when you feed the RRSP. Most financial advisers are recommending contributions for retirement plan so that you can reduce your tax bill by making these contributions which may depend on the plan type which are basically tax write-offs which don’t need itemization. Your contribution for a traditional RRSP is what we call pre-tax contribution which lowers your entire taxable income. You will get lesser income taxes despite of itemizing or taking the standard deduction. Since the previous year’s contributions that are made in April 15, they have been applied to returns of the previous years. This has been popular for people who rush to alleviate larger tax bills.
Flexing Spending Power – To save your money from tax bill, you need to spend your money somewhere else. Most employers provide benefits that enable people to reduce their tax bills by the money they’d planned to spend anyway like the medical expenses or dependent care. With flexible spending, pre-tax plans allow you with particular expenses like the health insurance, medical expenses and dependent care paid off by tax-exempt dollars. Employers take pre-determined and tax free amounts from their paychecks and put them on administered account which releases funds during incurrence of expenses. By contributing to flexible spending plan, it can reduce your gross income as well and your taxable income lowers while keeping more money from your wallet.
Giving Back – One of the most tried and tested ways for you to reduce your tax bill is through charitable contributions. More than just writing a check, there are actually so many ways in giving back. Clothes, books, toys, and other used items can be donated to charitable organizations and shelters which support all the needy people.
Bundling Contributions – If you need to save some extra money from your taxes, bundling your contributions is effective. With this approach, you can place a two-year deduction worth into one year. Vaulting your deductions from standard threshold and allow to use smaller deductions.
Buying only the Essential Stuffs – Most of the time, we tend to buy things that are not really needed. Some of us are fond of buying trendy stuffs that have recently launched in the market. But if you really want to reduce your tax bill, our accountant in Summerside advises you to buy only the essential stuff which you need for your home or offices.