CPA BC put together a handy little guide for some questions you might want to ask your accountant to prepare for tax time. Although it’s still a ways off, it’s important to be organized & prepared to maximize your return!
Here are some helpful questions to ask us on your next email, phone or in-person meeting. Our team is available all year-round to answer your questions & provide advice. Remember, that we are your accountant all YEAR long, and not just at tax time.
From CPA BC- Link Here.
- What can I deduct on my income tax return?
You can reduce the amount of B.C. personal income tax you owe through 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 In-Home 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. Here’s a snapshot of some of the most commonly used B.C. Basic Tax Credits:
Basic Personal Amount
B.C. Caregiver Credit
$4,674 (reduced when dependent income exceeds $15,820)
Age (65 or older by end of tax year)
$4,791 (reduced when income exceeds $35,660)
Charitable and Other Gifts
Actual (lowest tax rate on first $200; highest tax rate on excess)
Medical Expense Credit
Actual (reduced by lesser of 3% of net income or $2,221)
Student Loan Interest
If you make regular charitable donations and incur medical expenses, be sure to keep a close record of everything. Every dollar counts when it comes to tax credits.
What records do I need to keep?
It’s important to keep organized records to make filing your taxes a simple process. That way, you will be more likely to be able to maximize your eligible deductions, and ultimately reduce your taxable income, which will lead to less taxes owed.
Make it a priority to keep good personal financial records and have a file that contains all your tax forms. You could also consider using a financial management app to track your spending. Remember, you want to keep your records for a minimum of six years.
How can I maximize my savings account?
The 2019 tax year may be over, but you still have until March 2, 2020, to make a RRSP contribution for 2019. Check your RRSP deduction limit on your 2018 Notice of Assessment to determine how much you can contribute for 2019. The maximum RRSP limit for 2019 is $26,500. If you have an employer matching program, you should confirm how much you and your employer have already contributed to your RRSPs in 2019.
If there is room left for contribution, consider making an additional contribution to your RRSP for the 2019 tax year. By doing this, you may gain some tax savings. However, remember that 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.
If you didn’t maximize your TFSA contribution room for the 2019 calendar year, you could also consider moving some of your money from your chequing (or savings) account into your TFSA account. For 2020, the contribution room is $6,000. Remember, your contributions to TFSA are not tax deductible and the contribution room can be carried forward indefinitely.
- Make sure to let your accountant know about any tuition, medical expenses, charitable donations etc. to make sure you are maximizing any tax credits.
- Keep all records organized and up to date to simplify filing at tax time.
- Make sure to talk to us about RRSP and TFSA contributions, and how it might impact your return.
Source: CPA BC “Three Questions to ask a CPA”