Save Your Money - Tax Filing Details You Need to Know

Part of intelligent money management deals with taxes. While tax issues are getting more complex, being informed about your rights and obligations is getting more and more important. No matter what we do for a living, and whether we have a team of accountants on our side or we prepare our own very simple tax returns, knowing as much as we possibly can is imperative.

Taxes are a necessary part of life in our society, and preparing our taxes accurately and filing them efficiently is part of keeping a healthy and up-to-date view of our personal finances. This is especially true now that many people are more cognizant of the need to watch every dollar and ensure it is being used to its best capacity.

Tip #1 – ALWAYS Review Your Return Before Filing

Allowing a third party to prepare and file your tax returns without thoroughly reviewing the results is foolhardy and can lead to more money out of your pocket than necessary. While it is always wise to have a professional look over your returns (see Tip #2), the final acknowledgement of whether the information is correct is up to you. Never just sign and file a return prepared by someone else. You could be missing critical errors – perhaps you might catch an important change that will allow you more deductions or less tax payable – and equally important, you could be cited for filing an incorrect tax return and open yourself to auditing and possibly even prosecution.

Tip #2 – Get a Professional Opinion

Many millions of people prepare and file their own tax returns, usually to save on the fee it would cost them to have an accountant or return specialist do the work. This could be costly in the long run, however, as by not being familiar with any of the current tax laws and the loopholes and regulations that may have worked in your favor, you are potentially paying far too much in taxes. If you cannot pay for a tax return processing each year, invest in this service at least every two or three years, and have the professional look over your previous filings as well. Most tax filings can be adjusted up to three years back, allowing you to retroactively take advantage of loopholes or deductions you may have inadvertently missed. This little investment on your part could pay off in multiples with just one key change found by a professional.

Tip #3 – Practice Tax Planning

There is a big difference between tax filing and tax planning. Tax planning, a far more proactive activity than tax filing, involves planning your expenses, income and investment allocations throughout the year with an eye towards mitigating your tax obligations as much as possible. It is no crime to attempt to minimize your tax payments; tax payments are important and help to keep society’s programs lubricated, but on a personal level taxes may be your largest expense ever, over your working life. Why pay more than necessary, if there are regulations which could be working in your favor to help ease the burden? One or two meetings with a certified accountant could save you thousands of dollars over the years. With a professional you can discuss ideas for taking best advantage of various regulations you will almost certainly be unaware of, and because these change regularly, a professional’s input is highly valuable. This is especially applicable for married and common-law couples, people with dependent children and entrepreneurs, although anyone can save money with intelligent tax planning.

With these tips in mind, you can become a more informed consumer and citizen, and ensure you keep as much of your hard-earned money as possible!