If you have been organised in the past year in time for this year’s taxation, you will surely appreciate the effort. Otherwise, you should learn your lesson and start sorting things out now to make sure there will be no hassle when you pay your taxes next year. Here are a few budget tips to prepare for your next tax.
Tax Season Tip 1: Save for your tax
It is a simple tip that has always been neglected by individuals. We can start saving for next year’s tax season as early as now. This way, we may not have to save a significant amount each month. Little regular savings can accumulate to cover our taxes in the coming year. By that time, we will be spared from any possible stress that may arise from paying taxes. You may agree that tax amounts still hurt our budget. By saving a little each month, we can lesson the burden of tax season.
Tax Season Tip 2: Keep all records
If you have a small business, it will help if you will always keep records of all the venture’s income and tax documents. This will help if you need to file income taxes for your business aside from your personal tax. Many experts recommend keeping such records for at least 5 years. Keeping records is also important to file for your personal tax. The documents can always be reviewed if you need to re-compute your taxes in the future.
Tax Season Tip 3: Determine possible deductions
During tax seasons, deductions are very important. It can be difficult to keep track of them, especially if we are disorganised. Thus, as early as now, we should consider all possible items that can lead to significant tax deductions. First, defer income to accelerate deductions. Personal taxes for low and middle-income earners have been lowered this year. That is why deferring income can help generate savings on tax. Here are more tips on obtaining tax deductions:
Claim work-related deductions
You should keep and file all receipts and credit card statements. From those, identify records that can be considered as work-related expenses, which may include the purchase of uniforms, mobile and Internet costs, employment-related subscriptions, union fees, and home office expenses.
Determine eligible expenses for self-education
You can have tax deductions from costs that are related to re-educating yourself to help keep and improve your present occupational skills. Self-education costs include textbooks, course fees, student union fees, stationery, and depreciation of education-related assets like printers and computers.
List rental property deductions
Landlords can possibly claim deductions for specific expenses like advertising, body corporate fees, bank charges, council rates, cleaning, gardening, electricity and gas, loan interest, insurance, lease preparation expenses, land tax, legal costs, postage, pest control, repairs, water rates, and telephone charges.
Claim important non-work related tax deductions
Bank charges and interest payments for loans that were used to buy shares and many other income-producing investments can be tax-deductible. The same goes for donations to charities as well as to other gift deductible recipients. Thus, keep all receipts and acknowledgement documents.
