Common Tax Deductions You Might Be Missing Out On

Jul 9, 2024 | Syndication Cloud

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Originally Posted On: https://accountants-bc.ca/common-tax-deductions-you-might-be-missing-out-on/

 

Common Tax Deductions You Might Be Missing Out On

Tax season can be stressful, but it’s also an opportunity to get some money back from the Canada Revenue Agency (CRA).

While most individuals claim common deductions like medical expenses and charitable donations, there are many valuable credits and deductions that often get overlooked. Thankfully, the tax accountants at Accountants-BC Ltd. are here to keep you informed.

Join us as we explore the easy-to-miss deductions for individuals and businesses.

Maximize Your Returns During Tax Season

Tax deductions are a powerful tool embedded within the tax system designed to ease the burden on taxpayers. Our tax laws establish a baseline income level subject to taxation. However, they also recognize that certain expenses are necessary for you to earn that income or to improve your well-being.

By allowing you to deduct these expenses from your total income, our laws effectively reduce the amount you’re taxed on. In short, the more deductions you can claim, the less tax you owe.

Let’s explore some commonly missed deductions that can make a big difference on your tax return.

Don’t Forget to Claim Your Medical Expenses

You can claim a wide range of medical expenses beyond basic prescriptions and doctor visits. This may include:

  • Dental and vision care: Costs associated with dentists, orthodontists, optometrists, eyeglasses, and contact lenses may qualify for credits.
  • Prescription medications: Some medications may qualify if recommended by a doctor.
  • Private health insurance premiums: Premiums paid for private medical, dental, and vision coverage can be deductible.
  • Travel expenses for medical treatment: If you travel over 40 kilometers (one-way) for specialized medical care not available locally, you may be able to claim travel, meal, and accommodation costs.
  • Disability-related expenses: Costs associated with attendants, special equipment, and home renovations to improve accessibility may be claimable under the specific tax credits.

Claim Your Work-from-Home Expenses

The rise of remote work has created new deductions—and you might be eligible for them. If you have a dedicated workspace at home and meet specific criteria, you may be able to claim a portion of your home office expense.

Some of what you might be able to claim includes:

  • Rent
  • Utilities
  • Internet

Inform Your Accountant About Carrying Charges

Carrying charges encompass a specific category of investment-related expenses that can be deducted from your taxable income on your tax return. Think of them as the costs associated with “carrying” or maintaining your investments.

By claiming these deductions, you can offset some of the costs associated with growing your wealth, potentially leading to a lower tax bill or a larger refund.

Did you know you can sometimes claim student loan interest? It’s true! This valuable tax break can significantly reduce your tax burden, especially in those early years after graduation when student loan payments can feel overwhelming.

Student Loan Interest: Relief for Students and Recent Graduates

The Canadian tax system recognizes the financial burden of student loans and offers a fantastic benefit: the ability to deduct the interest you pay on qualifying student loans from your taxable income. This means you can subtract the total amount of interest you paid from your taxable income, which can lead to a lower tax bill or a larger refund.

Here’s how it works: Throughout the year, keep track of all the interest payments you make on your student loans. When filing your taxes, you may be able to claim the total interest paid as a deduction on your return. This deduction lowers your taxable income, potentially reducing your tax liability.

Do All Loans Qualify?

Only interest paid on government-issued student loans under programs like the Canada Student Loans Program or provincial/territorial loan programs potentially qualifies for the deduction. Interest on private loans or lines of credit typically doesn’t qualify.

Is There a Limit on Deductible Interest?

There’s no cap on the amount of student loan interest you can deduct. So, the more interest you pay, the greater the potential tax benefit.

Can You Carry Forward Unused Deductions?

If you don’t have enough tax owing to fully utilize the student loan interest deduction in a given year, you can carry forward the unused amount for up to five years and claim it on future tax returns.

The Moving Expenses Deduction

While limitations exist, moving expenses can be claimed if you move for work (at least 40km closer to your new job) or full-time post-secondary education. Make sure you keep detailed records of moving costs and bring them up with your accountant.

Tax Deductions for Businesses

Running a business comes with its fair share of rewards but also involves shouldering certain expenses. The good news? The Canadian tax system acknowledges these costs and offers a variety of business-specific deductions to help lighten the load. From home office expenses to professional development costs, there are valuable tax breaks waiting to be claimed.

Home Office Expenses

Similar to individuals, businesses may be able to claim a portion of eligible home office expenses.

Meals and Entertainment

While restrictions apply, some business meals and entertainment expenses can be deducted. The key is demonstrating a direct link to generating business income.

Professional Development

Costs associated with courses, seminars, and conferences relevant to your business are generally deductible.

Bad Debts

Does a customer owe you money? If you’ve exhausted all efforts to collect, you may be able to write it off as a bad debt expense. Remember that proper documentation is crucial!

Interest Paid on Business Loans

In many cases, interest paid on loans used for business purposes is deductible. We recommend that your business maintain detailed records of all income and expenses to support their deductions. Consulting with a tax professional for complex business deductions is highly recommended.

File Taxes With Professional Accountants

Keeping track of receipts, understanding eligibility, and navigating the ever-changing tax landscape can feel overwhelming without the right accountants by your side. Tax accountants stay up to date on the latest deductions and credits, ensuring you claim everything you deserve.

Imagine maximizing your return and minimizing your tax burden, all while you’re able to focus on building your business or tending to family matters. That’s what Accountants-BC Ltd. offers. Contact our office today for a consultation and unlock the power of informed tax planning.

You can reach us at (604) 683-2341.