Tax Saving - Tax Deduction

Tax Saving Tips: Keep More of Your Hard Earned Money in Your Pocket

During Tax Season, everyone's biggest concern is how to keep from paying in more taxes. Often it's too late during those lag months to do anything different, but there are a few things you can do now to plan for next year.

1. Put a Tax Savings Plan in Place, and Use It.

Discuss your tax issues with your Tax Preparer and put a plan in effect now for this year's income to save money on next year's taxes. By creating a Tax Plan & Budget now, you will have an active lead on what you should be doing during each quarter, not only to make your business more profitable, but also to save those extra dollars you pay to IRS and the Government.

2. Use investment, tax deferment, and alternate income sources to cut taxable income.

Invest in your future, for a time when you won't be making as much money, so you'll have a lower tax bracket. Put money in savings for your children's education and defer your tax costs until you have fewer children at home to support. IF your children literally do work in your business, put them on the payroll, let them pay their own expenses for summer camp and education, and reduce your tax burden. They paychecks are deductible, summer camp and education is not.

3. Adjust billing, collection, and payables for maximum tax advantage.

Yes you can defer billing a client until after the New Year, to avoid taxing that income in the current year. It may or may not be advisable, depending on the client. Prepaying for long term services can increase your deductions. Providing you really do use the services, this is an excellent method of reducing taxes.

4. Document your expenses, keep good records, and write a daily activity diary.

Document everything, no matter how trivial; keep good records of your activities and expenses related to business. When your receipts are confirmed by a diary entry, IRS can't argue with your deductions.

5. Be a Good Steward of your Money.

When your bills are due, pay them. IRS understands the value of punctuality. They charge penalties for being late. Penalties increase your Tax Debt. So, it's always best to pay your Tax bills when they are due or before.

Donations, time, money, and objects are deductible on some level, keep good records to determine your legal donation limits and prevent overpayment of taxes.

6. Work from Home

Home based businesses get the cream of Tax Deductions. These deductions are legitimate if you have proof. Your daily diary will provide active proof of your business operations, duties, and deductible expenses. If in doubt write it down. Ask your tax preparer to be certain.

7. Incorporate Your Business

Corporations pay less for the same Taxable income. In general, this statement is true. However, before going to the expense of incorporating your business, ask your Tax Preparer to advise you. It may not save enough money to pay for the legalities of incorporating.

There are many ways to save money on your Tax Saving Plans. These are just a few of the more popular methods. If you'd like more information, contact your Tax Preparer.

Source: http://blogs.rediff.com/taxsavingplans/2016/07/16/ritikashah11998-20/

Tax Saving

Tax Saving Plan for Employed People

Employed people have less scope for tax savings as compared to self-employed people.

If you are currently employed, the income and benefits from and related to your employment are taxed and you cannot claim any deductions against employment income except that are specifically allowed by the system.

Here are some taxes planning techniques which can lead to save taxes:

• Arrange to get nontaxable benefits: There are some employment benefits which are not taxable like contributions to a registered pension plan, contributions to a group sickness or accident insurance plan, contributions to a private health services plan, all or portion of the cost of free or subsidized school services for your children.

• Ask to have your source withholdings reduced wherever possible: In any situation where you expect to receive a refund after filing your return, you should review the form which you file with your employer and seek to have source with holdings reduced. If you get a refund, that means the has been holding your money and not paying you interest on it for many months. It is better you can send a cheque to at filing time so that you can use that funds in the meantime.

• Pay interest owing on loan from employer by January 30 of the following year:

If you receive a low interest -free loan from your employer, you are considered to have received a benefit from employment. The benefit is set at the CRA's current prescribed rate of interest minus any interest you actually pay during the year or within 30 days after the end of the year. This will provide you with a cash flow advantage.

• Consider employee's profit sharing plans for cash flow purposes: there is no source withholding on the amounts paid by the plan to you. Careful timing of the employers' contributions and the Tax Saving Plans disbursements can give you better cash flow than would a straight bonus payment.

• Transfer retiring allowances to an RRSP: If you transfer the entire retiring allowance into an RRSP, the legal fees will never become deductible. When you take payments out of the RRSP, they are no longer considered a retiring allowance.

• Claim the employment tax credit to help cover your work related expenses: Employees can claim a 15% tax credit to help cover their work related expenses.

• Employed trades people can claim the deduction for the cost of new tools: If you are an employed trade person and you must use your own tools on the job, you can deduct the portion of the cost of new tools.

• You can claim rebate for GST/HST paid on expenses deductible from your employment income.

Source: http://blogs.rediff.com/taxsavingplans/2016/07/14/ritikashah11998-19/

Tax Saving Plans - A Must for Everyone

What does one mean by income tax savings? What are the different tax saving plans etc. These are some of the terms which one needs to be aware of. To make sure that your hard earned money stays with you, it is important for you carry out an extensive research when it comes to tax savings. The income that you earn annually is subject to the Income Tax laws governing that country. The tax rates are not fixed and are based on the income that you earn throughout the year. But, one can save a lot on tax money, only if he or she plans it the proper way and takes wise steps at different stages of life.

So if the question how to save tax is mind boggling you, well we'll help you out with the best solutions. To extract maximum tax benefits, you need to invest your earnings in various tax savings schemes. These tax saving investments come with loads of features and benefits. With the help of tax deduction, a break granted by the government, some part of your income is excluded when it comes to calculating government tax.

Apart from this, you can also invest in long term Best Tax Saving Plan investments like pension savings plan for a life after retirement or a life cover to secure your family's future. Which means that tax saving plans do not just reduce your taxable income but also help you and your family have a secured future.

Now let's come to saving tax through life insurance policies. Life insurance policies are one of the best ways to save tax as under the Income Tax Act 1961 (Act), when investing in a life insurance plan, the premiums that you pay when calculating taxable income are waived off. So the assured sum and the profit which you receive are all exempted from tax. What's more? By investing in a Life Insurance Scheme, you get double the tax benefits. Now isn't that what you call a win-win situation.

Moreover, apart from this investing in a health insurance scheme can also generate great tax benefits. Along with money saved from tax, you secure yourself from any uncertainties in life like illness, accident etc. So to make sure that your money stays in your hand and you can give your family a good life, go ahead and invest in the best schemes as far as your taxes are concerned. It is a time tested that only the best investment plans guarantee a safe and sound return.

The author has a deep knowledge on the tax instruments and has been associated tax saving investments for over a decade now. And has a deep knowledge on the options to choose from.

Source: http://blogs.rediff.com/taxsavingplans/2016/07/06/ritikashah11998-18/

6 Tips That Can Help You Save A Lot More Tax

Planning your money right can help you save a lot that you otherwise end up paying as tax. If you take the right measures, you can reduce your taxable income, hence saving a lot more than usual. If you recently joined the tax-paying brigade or aren’t sure about where to look for tax savings, don’t worry! We have answers to all your questions related to Tax Saving Plan.

Here are six tips that can help you save a lot of tax:

1.       Save tax on rent payment

If you’re living in rented accommodation, your employer is supposed to give you some part of this money as House Rent Allowance (HRA). If you stay with your parents, you can avail tax benefits under section 80GG by paying the monthly rent to them. You can claim the least of the following:

·         25 per cent of the total income or

·         2,000 per month or

·         Excess of rent paid over 10 per cent of the total income

The HRA tax deduction limit has been increased from Rs. 24,000 to Rs. 60,000 in this Union Budget. However, this deduction isn’t available if you have a residential property in your name or in your spouse’s or child’s name.

2.       Pay less tax if you’ve an ailing dependant at home

Under section 80 DDB, you can get some tax benefits if you have an ill dependant at home. You get to avail a deduction of up to Rs. 80,000 for the medical treatment of a super senior citizen who’s at least 80 years old. If the person is between 60 and 80 years, it will be Rs. 60,000 and if the person is below 40 years, the exemption is Rs. 40,000. This deduction, however, is available for some specific illnesses and you can claim them only if the ailing person hasn’t filed for any such deduction separately.

3.       Invest in ELSS funds

Investing in ELSS funds is the most prudent way to reduce your taxable income. Because of their great potential and high liquidity, they are one of the most preferred investment options. If you’ve already fulfilled your KYC requirements, you’re eligible to invest online. Otherwise, you need to go through the KYC screening process first.

4.       Invest in ULIPs

ULIPs are something you can opt for as you get to avail the benefits of an insurance policy as well as an investment. Some of the ULIPs even cost less than direct Mutual Funds, and unlike ELSS funds, you can switch your corpus from equity to debt and vice versa. Since all insurance plans enjoy a tax exemption under Section 10 (10d), there’s no tax implication on the gains made from switching. Don’t forget to check the cost of the ULIP before investing.

5.       Restructure your salary

If you bear some expenses just because you’re working in a particular company, you can always ask your employer to restructure your pay. You can claim to avail various perks and allowances. All you need to do is give a proof of these expenses to avail a tax-free allowance. Some such allowances that fall under this category are:

·         Conveyance

·         Medical treatment

·         Telephone and mobile

·         Books and magazines

·         Uniform

Since these allowances are given according to your grade, you can’t ask for all of them. Your employer has the right to decide your eligibility for these.

6.       Leave travel allowance and medical expenses

Most employers give part of your salary as medical expenses. If you start collecting medical bills and produce them when needed, this allowance can become tax-free for you. The upper limit, however, for these expenses is Rs. 15,000 in a financial year. If you have any dependents, you can produce their medical bills as well. Similarly, depending on the HR policies of your company, you can also avail leave travel allowance that can be claimed if you go on a vacation. You need to produce the actual bills and receipts here as well.

[ Source : https://blog.bankbazaar.com/6-tips-that-can-help-you-save-a-lot-more-tax/ ]

Tax Saving Plans