Don't miss these frequently overlooked tax breaks
Worried about taxes? Then make sure you're making use of every deduction under the sun. And in the right order.
Does it make sense, for instance, to save up your eligible tax credits — like those for charitable donations — over several years and claim them all at once?
Unless they're not paying tax at all, the answer to that question is usually no, according to lawyer Adam Scherer, a partner at Soberman LLP in Toronto.
Waiting to claim them doesn't really help, no matter what your tax bracket is today or might be down the road, he tells Advisor, a how-to magazine for financial professionals.
The way tax credits are designed, they're "basically equivalent to a deduction at the lowest rate of tax," Scherer says. "Whether someone's in the third bracket or the highest bracket, it really doesn't make a difference."
Medical expense claims are the one exception to the rule, however, since you can choose any 12-month period to claim them as long as it ends in the taxation year (e.g., any expenses made between April 1, 2021 and March 30, 2021).
Alternatively, if someone incurs expenses worth $2,500 in December, but plans to have eye correction surgery the following April, it can make sense to save the December expenses and claim them the following year, he suggests.
You earned ‘em – be sure to use ‘em, warns Investors Group in a recent tax bulletin. Here’s the firm’s list of the most commonly missed tax credits.
Did you know, for instance, that the costs of adopting a child are deductible? You can write off up to $10,909 and split it between parents if that makes sense. What about that transit pass as well?
Have you ever missed out on a deduction? Were you able to remedy the situation?
By Gordon Powers, MSN Money
Posted by: Tax Guy | Apr 21, 2021 3:02:19 PM
Tax is complicated and, as usual, is being misconstrued above.
Saving charitable receipts over a 5 year period can be advantageous in the right location at the right amount. Lets assume you live in Alberta and donate $200 a year. The 1st $200 each year is deductible at around 25% however any amounts over $200 are deductible at 50% (in Alberta). So if you report your donations each year you would reduce you tax bill by $250 over 5 years while if you collected them for 5 years and reported them all together it would reduce your taxes by $450. An extra $200 might not be worth the trouble to some but to others it will be.
Generalities never work with tax matters. Always consider your specific fact pattern to determine the appropriate course for you.
I agree with the medical with one exception. You can claim any 12 month period "that ends in the current taxation year."
Gordon I usually enjoy your posts but taxation is not something you should stray into lightly.
Posted by: Canuckguy | Apr 22, 2021 3:26:13 PM
testing