Happy Valentine’s Day!
Valentine’s Day is just another day to tell those that you love how much you love them and in case words are not enough, it’s the perfect time to spend money and show them your appreciation. If a gift of chocolates gets you, “do you want me to get fat?” and flowers, “are a waste of money because they die”, and you have not booked dinner out yet, then I hope that next year you plan ahead better.
But seriously, call your mother and tell her you love her. She misses you (and if you do not have a mother, think happy thoughts about her today and wish everyone a happy Valentines Day and spread the love… The world needs more love.
The world also needs less confusion around taxes. That’s why TurboTax exists. TurboTax is Canada’s most popular tax preparation software, and it is so for a reason. TurboTax also loves you, especially on this day.
But I digress.
Here are 14 Valentines Day Tax Tips to discuss (or not) over a romantic dinner, or if you’re not having a romantic dinner, to discuss among friends and colleagues to show them how smart you are.
- Buying TurboTax for loved ones might not be the best option for the sentimental partners / loved-ones, however for yourself, it’s a wonderful present!
- In Canada, there are certain credits and deductions available for being married and Turbo Tax helps married couples optimize their deductions when filing together, thus getting back the maximum refund possible. What spouse / partner / loved-one wouldn’t want that.
- Flowers, chocolates and the sort are not tax deductible if they are for your spouse, or loved one, however, if you are buying for clients and for the purpose of advertising, then you might actually be able to claim the expense as an advertising expense.
- Thinking outside the box, since many people equate love with taxes, are gifts which have tax, or money themes on them, like socks, or PJ’s or undies with $’s on them… Cute, unusual, but cute.
- Minimizing taxes is akin to saying “I love you”, or “I really, really, really dig you.” Who doesn’t love minimizing confusion around which partner claims charitable donations at tax time? Donations, by the way, another great gift, but TurboTax moves charitable donations to the person who would benefit the most from that deduction, so that’s a huge relief.
- Ahh, kids! Couples who file tax returns together can save, save and save by using TurboTax because the software calculates the eligible amounts, and optimizes tax credits for children and expenses used on children. Knowing that the STEM camp you want to send your kids on over March Break could be tax deductible due to the child care aspect relieves stress and where there is no stress, there is love.
- Have a medical need for a massage? If so, that is an eligible medical expenses that you can turn into a wonderful Valentines day treat. Just keep the receipts!
- The majority of Canadians who observe Valentine’s Day spent an average of $200 (especially if they have kids and are buying for the kids and the kids are buying for the other kids…). If you’ve spent time during the year filing on time, maximizing your deductions and saving for key events, then you’ve got this.
- On Valentine’s Day, Canadians travel – especially this year where many schools are off on the mid-winter break and some provinces have Family Day. Travel is not a tax deduction, unless you’re self-employed and it’s the one time of the year that you re-charge your batteries, and it’s within reason, then you might be able to claim the deduction. Keep receipts.
- While Travel is popular, spending money on jewelry is even more popular for Valentine’s Day. This is not an area applicable for tax tips unless you’re buying it for the purpose of eventually turning a profit, and it’s in your line of regular business. If, for example, you buy 100 heart-shaped earrings to hock at your office for a slight mark-up, then you just became self-employed and that profit is tax deductible.
- After jewelry, believe it or not there is more wine purchased on and for Valentine’s Day than all other items. It’s anticipated that almost $9 billion dollars will be spent on wine, to create the mood, accompany dinner, as a nice gift, or to give yourself a little liquid courage to finally tell your loved one that you love them for the first time. Whatever the reason behind it, keep in mind that if you purchase a vintage bottle that has value and try to claim it as a tax expense, the appraised value can be challenged by the CRA, so make sure that you have the purchase price and an appraised price from a licensed appraiser.
- Careful about donating to your spouse / common-law partner’s RRSP account as a gift. Firstly, it might not be appreciated like you would think it might have, and more importantly, if the gift is then withdrawn and your spouse / common-law partner is in a much lower tax bracket, then in the eyes of the CRA that was done not for love, or for retirement, but to avoid having to pay taxes at the higher tax bracket, so the income from the withdrawal is then added to the gift giver and not the recipient. Nothing spoils the mood more than an unexpected extra 30% tax penalty.
- Valentine’s Day might be the best time to have that conversation over dinner about taxes, especially if you are just beginning to get to know each other. I cannot tell you the number of time, I have had people reach out to me for suggestions after finding out that their significant other has tax debt. Significant tax debt. Like, you’re never getting a refund, bank account frozen, lien on the property type of tax debt. In that case, maybe TurboTax is the perfect gift to get filings up to date and hopefully reduce the balances owing. No one likes to be “surprised” when they try to use their debit card to buy a cup of coffee only to find out that it’s declined because the bank account was frozen by the CRA. No one!
- While on the topic of surprises that no one likes at Valentine’s Day, and because we’re all about spreading love, and joy to Canadians, I strongly recommend that if one of the partners in a relationship owe money to the CRA, that transferring assets, such as, title of the house you live in, or the cottage you own, to the partner who doesn’t have debts is a REALLY bad idea. When this is done, because it is illegal, you are not saving your asset from being frozen or seized, but you are effectively passing your tax debts to your partner. That means the CRA can now discuss your debt with them, try and take it from their bank account, put a wage garnishment on their wages, and that would really suck.
So just remember this Valentine’s Day that it’s not so much what you say and do (unless your partner, spouse, or loved-one says it is) but being super-aware of how taxes impact your relationship positively and negatively, can make the difference between having a great Valentine’s Day, or having it ruined by a poorly thought out decision which causes emotional and fiscal stress for the future.
Good luck, and you’re welcome.
With more than 20 years’ experience helping Canadians file their taxes confidently and get all the money they deserve, TurboTax products are available at www.turbotax.ca.