Tuesday, March 8, 2011

Another (tax) year over!

It's with much angst, hostility, apprehension and worry that we at this time of year get out those shoe-boxes and start tabulating our receipts.  If you're self-employed like me then you don't have to get your paperwork in order until June unlike the 9-5 crowd who have to file by the end of April.  Now this may sound all well and good since you won't have to think about it until later, however if you OWE any money (which 95% of self-employed people do) then you MUST pay it all by the earlier deadline of April 30th.

How on earth do you know how much to pay if you haven't done your taxes anyway you ask?  Good question.  If you find out the answer to that then let me know!  I'll just boil it down to the Canadian government and "bureaucratic efficiency" at it's finest.  I suspect the feds want you to voluntarily remit and then claim your deductions later.  Which for those of us who have trouble putting money aside then this is probably a good idea so you don't find yourself in a horrible mess owing money to the CRA.  (Canada Revenue Agency)  Also your HST/GST is due at the end of April as well.   Yes yes, I know some of you pay your GST/HST quarterly, but if you're as low down on the income ladder as I am, you only have to remit once a year.

Since I'm reasonably good (most of the time) keeping my hands off my savings for such things I'm usually ok with this since I can put the money into a "high" interest savings account and earn a few bucks on it. 

If you're organized like some annoying jerks I know (myself included) keep a running tab of all my expenses so at this time of year with a few mouse clicks I can print out a summary which has all the pertinent info for my accountant.  Yes, I'm sure I could "save" money on his fee if I used a software-box type income-tax dealy but an accountant (a good one) will let you know that it's probably wrong to try and deduct all of your booze receipts.  (You can actually deduct 50% of them as an entertainment expense, but don't push your luck.  If you try to write off half of your income on booze alone you're begging for an audit)

Other benefits of an accountant: he/she will be keeping himself/herself apprised to all the nit-picky details of the tax code and how it pertains to you in the starving-artist bracket.  Also depending on your arts discipline, there might be tax credits toward equipment or supplies that you might not have thought would be deductible. 

Essentially EVERYTHING you need to be creative can be deducted in some way shape or form.  Your accountant will tell you how much and when too much is too much.  Also he/she will be able to help you when you're going to make a big purchase.  A car for example: generally people will pay cash or take a car-loan out to buy their vehicle.  However leasing is often a much better way to finance since you can deduct the lease payments too!  If you buy your car you can only deduct how much the vehicle depreciates.  For some vehicles that's a lot and some not so much.

Aside from the "tax-pain" if you haven't been putting money aside for what you owe, if you stay on top of things tax time won't be all that stressful. 

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