Tax season survival tips

Credit to Author: Shalini Dharna| Date: Tue, 05 Mar 2024 02:26:08 +0000

Why do we find tax season so daunting? For most of us, there is a lack of understanding and fear of overpaying ‘the tax man’,  because we have never been educated on finances and taxes.  Believe it or not though, with the right approach and guidance, it can be a manageable and even stress-free process. Here are some valuable tips for surviving tax season and insights on how to select the right accountant to assist you in this crucial financial journey.

Stay organized all year round

While you may have your tax slips organized, there are things you are probably getting all year round that you scramble to find at tax time, such as medical expenses and donations. Deductions such as business expenses, charitable contributions, and education expenses can lower your taxable income, so you don’t want to lose these or be scrambling for them at tax time.

Being organized is key to a successful tax season. Create a filing system to keep all your tax-related documents organized and easily accessible. Create a physical folder for all your paper receipts and digital folder on your email or desktop for all digital.

If you’re an entrepreneur or a rental property owner this will include your bookkeeping too. Consider using digital tools or apps to track expenses, income and deductions throughout the year. This will help you streamline the tax preparation process and minimize the risk of overlooking important information.

Self-advocacy

We all want to think our accountant has our best interest at heart – and they do – but they don’t know your whole story.  The government is constantly offering different rebate and credits for things your accountant may not realize you qualify for.  Plus in the midst of tax season chaos, things can get missed. Do your research on what is available and try to schedule time before tax season to discuss if any of them apply.

Deductions such as business expenses, charitable contributions and education expenses can lower your taxable income, while credits like the Earned Income Tax Credit and Child Tax Credit can directly reduce the amount of tax you owe. Be sure to explore all available deductions and credits to maximize your tax savings.

DIY or professional help?

Tax filing software has come a long way to make it easy for self-filers. Arguably, the biggest deciding factor is do you need advice? If your accountant is just filing without advice then there may not be value add to working with someone. But hiring an accountant can provide valuable benefits, especially for entrepreneurs and small business owners. How complex is your situation? An experienced accountant can help you navigate complex tax laws, maximize your deductions and ensure compliance with the latest regulations. When selecting an accountant, consider their experience, qualifications, communication style and fees to find the right fit for your needs.

So you need to ask yourself a few questions. Are you comfortable doing it yourself? Do you understand your tax situation enough to complete the schedules properly? Do you need someone to talk to about your situation? Are you looking to hire the right accountant for your needs?

Start by asking for recommendations from friends, family members or fellow business owners. Look for an accountant with expertise in your industry or niche, as they will have a better understanding of the specific tax challenges you may face. Verify their credentials, such as CPA certification, and inquire about their experience with tax planning, compliance, and audits. Also ask them about their communication style and policy. It is important to do your homework as the tax filing industry is not regulated – anyone can offer tax filing services, being a CPA is not a requirement.

If you have a modest income and a simple tax situation you may also be eligible for help at a free tax clinic. They are hosted by community organizations across Canada through the Community Volunteer Income Tax Program (CVITP) and the Income Tax Assistance – Volunteer Program (ITAVP) in Quebec.

By following these tips and selecting the right accountant, you can navigate tax season with confidence and ease. As you find someone to answer your questions and and stay organized all year round, the mental stress with tax season should also reduce. Remember that tax season is not just about meeting your tax obligations; it’s also an opportunity to optimize your financial situation, plan for the future, and ensure compliance with tax laws. With careful preparation, organization, and guidance from a trusted accountant, you can survive tax season and set yourself up for financial success in the year ahead.

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