Tax filing can be stressful for many factors. You might be nervous about making mistakes. More importantly, you might feel like missing out on ways to reduce the tax amount. There are many ways in which you can save money on taxes. And you can go to a professional income tax consultant, or do it yourself. In this blog, we have curated a brief list of tips that can help you save money on tax.
1. Pay the RRSP limit
Each year, you can contribute to your Registered Retirement Savings Plan. There’s also a maximum limit on how much you can pay without having to pay a penalty. Find the limit and pay that amount. Your RRSP is not taxable. Thus, you can reduce the tax amount while also saving up for the future.
2. Borrow and invest
Growing your stock portfolio by borrowing money is beneficial for your tax savings. The interest you pay is tax-deductible. Hence, you can improve your stock portfolio and save money on income tax payments.
3. Claim medical expenses
While filing your tax returns, do not forget about all the medical expenses you paid. Always be sure to keep all your medical receipts. It will help you in case of an audit. However, you cannot claim every penny you spend on medical expenses. The total amount must be lesser than 3% of your net income or $2,268.
To make the most of this feature, combine the medical expenses of your family members under one person’s tax return.
Finally…
Following these three tips can help you improve your tax credit and get higher tax returns. When calculating income tax, always gather information from the CRA website. If not, you can also reach out to your local tax consultants for advice.
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