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  • Last-minute tax return tips that can add up to more tax-savings for yo

    By singh_planner

    ::::Last-minute tax return tips that can add up to more tax-savings for you::::

    It's tax time! And while preparing your tax return is never fun, you can make it more 'rewarding' by taking full advantage of all the tax credits and tax deductions available to you. Here are a few easy tax tips calculated to relieve your tax-prep stress and put more jingle in your pocket.

    Toe the line. For most taxpayers, the tax-filing deadline is April 30th. Those with self-employed income have until June 15th to file, but the payment of any taxes owing for the year is still due by April 30th. Missing the filing/payment deadline will cost you. There's an initial penalty of 5% on all taxes owing after the deadline, plus 1% a month on your unpaid balance, to a maximum of 12 months. And if you filed a late return in any of the previous three years, the penalty could be even higher.

    Pay the piper. If you file on time but don't pay all owed taxes, you'll be assessed interest at the Canada Revenue Agency's (CRA) prescribed rate. (The prescribed rate on overdue taxes -- which is set each quarter -- for the first quarter and second quarter of 2005 was 7%.) This interest assessment may also apply if you're late with a quarterly income tax payment.

    Check before you cheque. Even in this computer age, mathematical errors are still the most common mistakes made by tax filers. Make sure your calculations are accurate to avoid an overtaxed return.

    Deduce all deductions. Tax deductions reduce the amount of income subject to tax, and can also reduce your marginal tax rate - so take full advantage of them. One of the most important is your Registered Savings Plan (RSP) deduction. Always make your maximum RSP contribution and use up any carry forward contribution room -- you'll not only save on taxes, you'll also enhance your RSP's growth potential.

    Other often overlooked deductions include: the16% federal credit for Canada (or Quebec) Pension Plan (CCP/QPP) contributions and Employment Insurance (EI) premiums; allowable spousal support payments; allowable interest charges on loans to purchase income-producing assets; accounting fees and safety deposit box fees associated with investments; union and professional dues; personal pension plan contributions; certain moving expenses; expenses and capital losses related to self-employment; realized capital losses from the sale of non-registered investments to the extent they can be applied against realized capital gains; and the possibility of child-care expenses for a working parent or student.

    Give yourself full credit. Tax credits directly reduce your tax bill. To maximize the tax credit on medical expenses, pool them on the tax return of the lower earning spouse. The tax credit for charitable donations increases substantially above the $200 threshold - so pool your donations or carry them forward for up to five years to surpass the threshold. The equivalent spouse credit is available to an unmarried person who supports a family member. A higher-earning spouse may be able to claim a spousal credit, which decreases as the spouse's income increases. Certain credits - such as the age credit, disability credit, tuition and education credits - can be transferred to a spouse or supporting relative when not used by a dependent.

    If you take the time to read the tax guide the government sends along with your tax forms, you'll save both time and money. And to make sure you've taken full advantage of all the tax breaks coming to you in ways that match your longer-term financial goals, put a professional financial advisor on your tax team.

    Financial Consultant

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