When you're buying or selling a home, really what you're doing is planning for your future. You're setting yourself up for emotional security and in a financially secure position. It's not surprising that the stress people feel when purchasing a new home is similar to the stress they feel when working on annual taxes and planning for the future. The struggle is real.
The truth is - a lot of us hide from the realities of our finances and for lots of us, the stress actually comes from not knowing the full picture, from the uncertainty and from the lack of control. For that to cause anxiety is normal--that's human nature! This year, lower your stress about tax time by fully empowering yourself with your financial information and by understanding exactly what opportunities your taxes have for you to save for your future, which no doubt will include your dream home.
There's been a few big changes that might pay off big time for you this time around - here they are:
Planning to Retire? Maximum pensionable earnings increased for The Canada Pension Plan (CPP) in 2020 is $58,700 up from $57,400 in 2019.
New CPP Contribution Rates: Employee and Employer: 5.25%, Self-Employed: 10.5%
Maximum Yearly CPP Contributions in 2020: Employee and Employer: $2,898, Self-Employed: $5,796
Did you know? Retirement account contributions can roll over if you didn't max out your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TSFA) contributions. The Canada Revenue Agency (CRA) lets you add the difference to next year's contribution.
Do You Own a Small Business? The tax rate dropped to 9% on the first $500K of income compared to 10% in 2018.
Does Your Business Generate Passive Income? If you make more than $50k, the 9% tax rate may not apply.
Common Small Business Deductions:
• Home Office Expenses (can include interest on your mortgage)
• Vehicle Expenses
• Accounting and Legal Fees
• Reserves or “Sinking Fund” (for reasonable amounts)
• Office Rent
If you're reading these and squinting and possibly rubbing your temples, you might want to hire a professional to help you get them sorted out. Give us a shout and we can give you a referral.
And while we're on the subject of reliable professionals, keep your eyes peeled for CRA scams this tax season. In 2018, more than 4,000 victims lost out on over $15.2 million as a result of tax scammers pretending to be with the Canada Revenue Agency (CRA).
Communication Scams to Watch For:
• Phone Call
• Text Message
• Demanding personal info — social insurance, credit card or bank account numbers.
• Referencing debt you don’t have.
• Threatening or coercive language.
• Demanding immediate payment, especially in the form of bitcoin or gift cards.
• You are prompted to visit a website outside of the canada.ca official domain.
• Saying they’re sending the police.
Before You Respond, Ask Yourself...
• Is this link legit? Hover over it to see where it leads before you click.
• Am I sure this caller or sender is a CRA employee? The CRA will never pressure or threaten you to take immediate action.
• Do I owe money to the CRA? If you know you don’t, it’s probably a scam.
• Have I received an official statement of account recently? Government programs like Canada student loans or employment insurance will send you official statements — not a threatening phone call out of the blue.