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5 ways to lower your taxable income

(NC) Let’s face it, when it comes to filing our taxes, we all want to maximize our refund or minimize what we owe. While there’s no one-size-fits-all approach to tax filing, there are some simple ways to help lower your taxable income. With tax season quickly approaching, here are five tips that will benefit you.

  1. Maximize your RRSP contribution. A Registered Retirement Savings Plan is a great way to save money for retirement and reduce taxes. RRSP contributions are tax-deductible and any money you put into that account reduces the amount of tax you pay.

  2. Claim childcare expenses. If you have children or dependents under the age of 18, many of their expenses can be claimed when filing your taxes. Claiming expenses for daycare, caretaker or nanny services, and camps can help reduce your taxable income each year.

  3. Donate to charity. Donations are a great way to reduce your taxable income while doing good for your community. They’re a non-refundable tax credit, so while you don’t get money back, it does reduce any taxes you might owe. Make sure to keep your donation receipts from registered charities.

  4. Claim home office expenses. COVID-19 has forced many of us to continue working from home, and the government has made it easier to claim a deduction for home office expenses. For the 2021 tax year, the government increased the “temporary flat-rate method” for claiming home office expenses from $400 to $500 ($2 per day for 250 days) for 2021 and 2022. For those who exclusively work from home, not just because of lockdowns, home office expenses like internet and utilities can be claimed against taxable income.

  5. Separate business and personal expenses. Business owners can claim any expenses that assist in operating their business. For example, those who own an Airbnb can claim cleaning supplies, while hairstylists can claim chair rental fees or supplies like hair colour or blow dryers, as long as it’s clear these are exclusively for their business needs. A good habit to get into is to keep business expenses on separate receipts or use different payment methods from personal expenses to show the separation between the two. Find more information from the advertisers in this week’s Standard Financial Matters feature.

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