We all know tax time comes around each year and so begins, the customary panic, as the deadlines creep closer. With a bit of organization you can make it easier.
- Keep a mileage logbook in your car and fill it in every time you fill up. Note any business mileage down in the comment section and on the receipt. This ensures you can match them up later in the year.
- Calculate how much you can claim for home office use by the percentage of your home you are using, multiplied by the hours worked during the day and then divided by 24 hours. This gives you the cost you can deduct. Adjust if you are only working part of the week or year.
- Utilize some form of accounting system where your receipts are listed in categories rather than a large box for an accountant’s assistant to sort out – which invariably means more expense to you.
- Depreciation of office equipment can be deducted but firstly decide if you should buy or lease, depending on the items asset value. Which option gives you the best deal for upgrading, efficiency and wear and tear? To calculate the deduction divide the bought items cost by five or seven years and then use that amount over the course of your taxes. For leased equipment you can deduct the whole leasing costs for the year.
- Within reason other deductions for your home can be utilized, such as a portion of your mortgage to routine maintenance to cleaning materials. However, do not go overboard – a kitchen upgrade might have the CRA questioning you.
- Often missed business expenses are business lunches, customer gifts and entertainment. Mark your receipts and categorized them in your accounting system so they are clearly identified.
- One allowance that should be avoided is the CCA – Capital Cost Allowance. Most professionals will advise you not to claim as you will have to pay capital gains on the depreciated portion of your home once you sell it.
What tax tips can you share?
Have you found a neat device to assist you in keeping track?
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For more articles and blogs by Mandy Eve Barnett, please check out her website by clicking the link below.