With the year coming to a close, taxes might not be top of mind. Between holiday shopping, attending staff parties, and planning a festive meal to suit your picky-eater relatives, tax planning has likely taken a backseat. No need to worry – you still have time. Here’s our list of 3 things you can do before the end of the year to reduce your income tax burden.
1. Contribute to Your RRSP
Making a contribution to your Registered Retirement Savings Plan (RRSP) is one of the fastest and easiest ways to reduce the amount of income tax you have to pay. Check your CRA My Account or last year’s Notice of Assessment to find your RRSP deduction limit.
If you’ve participated in the Home Buyers’ Plan or Lifelong Learning Plan, be sure to contribute enough to your RRSP to cover your repayment. Although these contributions don’t directly lower your tax burden, if you forget to contribute, the repayment amount is converted to taxable income.
2. Make a Donation
Up to seventy-five percent of your net income can be claimed as donations. Making charitable donations is quick and easy, and makes you feel good. You can only make donations to charities and other organizations that have the Canada Revenue Agency’s stamp of approval but the list is long.
To maximize your charitable donations, you’ll want to donate more than $200.When your donations total more than $200, you get more of a tax credit for them. You can have one spouse claim all of the charitable deductions made by both spouses to maximize your charitable donation tax credits if you wish.
3. Maximize Medical Expenses
Need your prescription refilled? Ready for new glasses or contacts? Been putting off that appointment with your chiropractor? If you answered yes to any of these questions, don’t wait until the new year. To increase your medical expense credit this year, be sure to incur the expense before December 31.
Other commonly missed medical expenses include
- The cost of tutoring for kids with learning disabilities.
- Orthopedic shoes, boots, or inserts if recommended by a doctor.
- Home renovations that increase mobility or accessibility for disabled family members.
- Motorized scooters (if used in place of a wheelchair).
