How should we prepare for the 2023 recession?January 10, 2023
Business planning: What is it? What is its importance, and what are its main components?January 20, 2023
What are the five simple ways to reduce tax stress?
Tax season is stressful, as we have to calculate how much we owe and ensure we do not miss the return deadline. And also, tax codes are not easy to understand; they are tiring and complex. But we can not avoid taxes, so it’s wise to get familiar with all the rules to know how we can minimize our tax liability. The tax season in Canada starts in February and lasts until May or April. So, it’s the right time to prepare the documents to file your tax returns. We have listed five ways that can help de-stress the tax return process.
1. Start early
One of the best ways to reduce stress is to start as early as possible. So, start by gathering the documentation and researching the deductions to which you may be entitled. You can also download a tax software application or consult the best accountant in Kelowna to better prepare for filing your tax return.
2. Know the deadlines
If you do not want to pay penalties and interest rates, pay your taxes on time. Learn about the deadlines and mark them on the calendar. However, one thing that you need to note here is that there are different deadlines for different tax returns. We have listed below some deadlines according to the type of tax return.
Personal and business income tax return:
Canadians have to submit their personal income tax return by April 30th of each year. However, when it comes to filing a business income tax return, the date depends on the type of business.
GST/HST and Payroll deductions:
How often you file GST/HST returns determines the deadline for your business. For example, someone who files quarterly for the GST/HST needs to pay the taxes one month after the quarter. Similarly, if you are an employer who deducts employees’ premiums and income tax from their wages, you need to remit those deductions to the Canada Revenue Agency (CRA) on or before the 15th day of the month following the calendar quarter.
3. Put away enough cash to cover your taxes
As we have mentioned before, failure to pay your taxes on time will result in penalties and interest charges, so it’s wise to set aside enough cash for taxes. Though the amount you should keep depends on the type of return, experts recommend keeping 20 to 30% of your income. People who are self-employed or have fluctuating incomes should set aside some money each month and not wait until the end of the year. You can also seek the help of a professional for tax filing to determine how much money you should set aside for taxes.
4. Think about E-filing your tax return
You can submit tax returns to the government in several ways. One way is by filing taxes online. And there are several benefits to e-filing your tax return, such as below.
E-filing allows the Canada Revenue Agency (CRA) to process your returns faster, which means you will receive your refunds or any benefits sooner.
You can file taxes from the comfort of your home at any time of the day or night with electronic filing.
E-filing helps spot and correct errors, such as missing information in tax returns.
If you submit your return electronically, the CRA will automatically notify you that your return has been received.
5. Keep yourself updated on current tax reforms
Tax reforms and cuts impact your personal and business taxes, so you need to be aware of them. You can stay informed by subscribing to alerts and newsletters from the Canadian Revenue Agency. Also, following the CRA on social media platforms such as Twitter and Facebook can help you get information on tax changes. Monitoring government websites will also enable you to stay informed about tax changes or reforms. You should also keep in mind that tax laws vary from one province and territory to another, so be aware of the tax rules of the territory or province where you reside or operate your business.
You need to consider a lot of factors while submitting your taxes. Every year, when the time comes to file taxes, you need to remember several things, such as deadlines. We know it’s not easy, but you can easily get through it if you sincerely follow the above ways and keep searching for tax-related information online.