Finance Tip of the Bi-Week

October 12, 2016

You’re in debt more than you think. Did you know that you are in debt $39,425 more than you think you are? As of this morning $39,425 represents the total debt you owe for the privilege of living on Ontario, Canada. The Canadian portion of that $39,425 is $17,614 while the portion for being in Ontario is $21,811 per person? Notice that the Ontario portion of our debt is more than the Federal portion. I was blown away when I saw this.

The USA is much worse. Their Federal per person debt is $60,538 and if let’s say you lived in Michigan one of our neighbouring states you would have to add another $8,566.

Check out these websites for the stats.
http://www.debtclock.ca/
http://www.debtclock.ca/provincial-debtclocks/ontario/
http://www.usdebtclock.org/
http://usdebtclock.org/state-debt-clocks/state-of-michigan-debt-clock.html

Charitable Donations

If you are a charitable person and donate to charities don’t forget to ask for a charitable donation receipt. At tax time you get a credit for the amount you donate. The first $200 receives a credit of 20.5% ($41) but any amounts more than $200.00 receive a credit of 40.16% to use against the taxes you pay.

If you’re a student, you may not pay any taxes so the tax credit may not help you in the current year but don’t worry the government lets you hold on to those receipts for 5 years so even though they may not help you this year they will when you get out of school.

So… Save those receipts. If you don’t keep them you are literally throwing money away.

If you feel that you don’t like the idea or getting money back for being charitable you can use the money you get back in taxes to give back to the charity you like.

Finance Tip of The Bi-Week

March 31, 2016

There is common advice that circulates that when investing, a person should be diversified. Diversity of types of investments is very good when investing, but if a person isn’t organized it can be a huge pain in the neck at tax time, and when dealing with individuals who have recently passed away. It’s hard to track for taxation purposes. Diversity is one thing, but having money with three or more financial planners can be very cumbersome.

When doing your taxes, if you have money invested with multiple financial planners it is harder to keep track of all your necessary tax forms and to make sure you have calculated your capital gains properly. It also makes it more likely that you will over contribute to your RRSPs and not be able to stick to a solid financial plan. It’s hard to have one plan with three financial planners.

Keep this in mind as you make investments in the future.

Finance Tip of The Bi-Week

March 17, 2016

Here’s some more great advice for students.

Do you taxes! Even if you don’t expect to get a refund.

One of the most valuable credits that students get is the tuition credits. It might not seem useful for students in school but they are very valuable in your first year out of school with your first full time job. The tuition credits kick in and create a huge tax refund. If you don’t file your taxes you don’t log them in with the government and if they don’t get registered with the government they get lost.

I wonder sometimes how many wasted tax credits there are out there that have been lost to the government coffers just because students didn’t think they needed to file their taxes because they knew they wouldn’t owe.

I’ve helped more than one student go back and refile or file old tax returns to get the advantage of old tax credits.

Piece of Advice #2.  The tuition tax form you need is called a T2202A and you can get it from your student portal.

Finance Tip of The Bi-Week

Are RRSPs a good idea for students?

RRSPs are great in that they help people pay less taxes and save for the future, but they’re not very useful for students.  Students typically don’t make enough money to pay taxes, so when they put money into RRSPs they don’t get any taxes back at tax time.  Some would argue that RRSPs are good for students because it gets them in the habit of saving for retirement or a future home purchase, which I agree but the lack of tax deferral is a real drawback.

What do I do if I’m a student and I have already put money into RRSPs?

If you have already put money into an RRSP plan ask your tax preparer to report the RRSP, but hold the deduction amount.  This way you will be able to make the deduction in a future year when you are actually paying tax yet still have the RRSP investment generate income tax free

Finance Tip of the Bi-Week

Have you ever heard someone say “I don’t want to work overtime or make too much money, because I’ll be in a higher tax bracket and they’ll take all my extra money in tax.”

That saying is dumb.

Many people (including myself when I was young) think that as soon as you reach a certain income level all your income gets put into a higher category.  That’s not true.  It’s only the amount that you make that is in the higher category that gets taxed at a higher rate.  It’s like milk and cream.  More tax is paid on the cream, but there will always still be more money in your pocket than you had before, and who doesn’t want more money?

Finance Tip of the Bi-Week

With my father-in-law passing away last week, I thought it timely to mention that a key part of any financial plan is having a will.

Once you have children or acquire assets of any value like a house it’s a really good idea to get one.

I’ve had two client’s die in their early twenties leaving no will and a huge hassle for their parents. Without the power of attorney part of the will it’s a real pain for the surviving relatives to manage your assets like bank accounts etc. leaving them work on top of the grief that comes with loss. It’s actually kind of rude to not have a will once you reach a certain age. You never know when you’ll die so it’s best to be prepared.

Job Posting

BOOKKEEPER/TAX PREPARER

Looking for some independence?  How about local travel to client sites providing a variety of Bookkeeping and Tax Preparation services for an established bookkeeping company?

We are looking for a dedicated and detail oriented bookkeeper with 2+ years of experience in bookkeeping and tax preparation.  This position is suitable for someone who is looking for 30 hours per week to full time hours and likes a bit of variety!

Compensation will be both an hourly wage of $15 plus access to a competitive quarterly performance bonus (more details can be provided in the interview process).

The successful candidate in this role will provide bookkeeping and tax preparation services to company clientele including, preparation and maintenance of complete sets of books, records of accounts, financial transactions and the verification of these procedures.  Direct involvement in the smooth and compliant financial operation of company clientele with a dedicated focus on accuracy and transparency.

Duties in this role will be to:

  • Keep financial records and establish, maintain and balance various accounts using manual and computerized bookkeeping systems
  • Post journal entries and reconcile bank accounts, prepare trial balance of books, maintain general ledgers and prepare financial statements
  • Complete and submit tax remittance forms for:  payroll, HST, WSIB and other government documents
  • Prepare personal and business tax returns and perform other bookkeeping services for review
  • Assist with audits as required
  • Take phone messages and answer client questions
  • Track time and billing using Microsoft Outlook
  • Prepare weekly, bi-weekly and monthly payroll for small businesses
  • Handle cash and payment as needed
  • Research and keep up-to date with government tax guides and other business related documents
  • Travel to and from client sites – approx 70% to local Ayr and KW area
  • Maintain and build client base
  • Remain current with accounting practices
  • Maintain complete confidentiality of client accounting details
  • Other duties as assigned

Required Skills and Abilities:

  • Completion of secondary school, Completion of college level accounting, bookkeeping or related field OR
  • Completion of two years (first level) of a recognized professional accounting program (e.g., Chartered Accounting, Certified General Accounting) OR
  • Courses in accounting or bookkeeping combined with several years of experience as a financial or accounting clerk are required
  • Knowledge of General Accepted Accounting Principles (GAAP)
  • Strong computer skills including experience with: Simply Accounting, Microsoft Office (Word, Excel, Outlook), CANTAX, QuickBooks
  • Experience with Great Plains Dynamics is an asset
  • Valid Driver’s License

We thank all candidates for their application, all resumes will be screened and only those selected for an interview process will be contacted.  Please apply to this email: hr@pv3tax.com

Tax Season is not over yet…

For the average Canadian taxes are to be filed with the government on April 30th but for those of us who are self-employed we have until June 15th (June 17th this year) to file our taxes.  Just remember that if you expect to owe money that interest starts building up as of April 30th regardless of whether or not you have filed so get them filed as soon as you can.

How Expensing Vehicles Works from my Perspective as a Tax Preparer.

Every year (especially with new clients with small businesses) I get the question about what receipts a small business owner should keep in regards to their vehicles.  For the majority of my clients it works like this:

Keep all of your:

  • Gas Receipts
  • Repair Bills
  • Insurance Bills
  • License and Registration Receipts
  • Car Wash Receipts
  • Parking Receipts
  • Lease Payments and Lease Paperwork
  • 407 Bills (That apply to business travel)

Other expenses to take note of:

  • The Fair Market Value of your vehicle when you started your business
  • Interest costs on any loans against your vehicle loan if purchased

Even if you only use your vehicle for small trips and your business is small, keep all of your receipts. I always recommend keeping an evelope in the visor of your car and as soon as you pay a car bill put it straight into the envelope.

The next step is important if you want to keep the government happy.  You need to have prood of all the business driving you drove throughout the year.  The best way to prove that you made business trips is with a mileage tracker.  Throughout the year if you kept good records you should know how many kilometres you drove for business and how many kilometres you drove in total.

Ex.  2,000 kms for business driving divided by 10,000 kms of total driving equals 20%.  Therefore we would be able to apply 20% to all your vehicle costs.

Ex. Your vehicle costs $5,000 to drive throughout the year and your percentage is 20% therefore I can reduce your taxable income by $1,000 ($5,000 x 20%).