Tips for Last Minute Tax Planning

JMH providing you with some last-minute tax planning ideas for the end of the year. Tis the season for baking cookies, decorating the house, attending parties, and last minute tax planning!!

We know that isn’t what you were hoping for, but it is the right time to ensure the following items are checked off your list prior to January 1.

Donations:

If you plan on making any additional charitable donations this year, ensure you do it by December 31st.  This offers you the ability to claim the amount on your next tax return.  This can also serve as a great Christmas gift for those in your life who don’t want anything.

RRSPs:

You have until the end of February to make your last minute RRSP contributions.  However, if you are planning properly, you will know by the end of December what type of contribution you should be making, so you can get the deduction on your next tax return.  Before going ahead and making that contribution, contact JMH to make sure the amount isn’t above your contribution limit!

Capital gains or losses:

If you are holding some stocks that have increased in value, it might be better to recognize that gain now rather than in the future – depending on your income for the year.  On the other hand, if you did dispose of some shares early on in the year, you might want to trigger some losses in December to cover those earlier gains. It is a good idea to meet with both your financial advisor and your accountant to decide these things in early December to ensure that the loss or gain is triggered in the right year!

Medical Expenses:

If you have a bill outstanding with your dentist, pay that before year-end so that you can claim the medical expenses.  If you need to get that root canal done, ensure that you see him/her before December 31st too.  You want to try to bundle your medical expenses in one year rather than spreading them out for the best tax advantage.

Small Business:

If you have a corporation and are operating as a small business, watch out if you also have any investment income.  Recent changes with CRA means that if you have investment income (including capital gains!) above $50,000, you could be impacted.  We are happy to discuss this with you.

So, while you are enjoying all the other festivities that the season brings, don’t forget to consider these last-minute tax items that will help you in the New Year.

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