What is Deductible on Your Taxes?


Every time tax season comes around, the burning question of ‘what are my tax deductible expenses?’ pops up in our minds once again. While we all cringe at this time of the year as our incomes drop by a third due to taxes. But what if you could recoup some of that money by claiming deductions? We know how taxing this subject is but don’t worry, we’ll get through this together. In this article, we explore what is tax deductible in Canada and how to claim them on your taxes. No more worries about what does or does not qualify for a deduction, keep reading to learn everything you need to know about tax-deductible expenses. Correcords Bookkeeping Inc., is a great resource for your tax questions.


What is deductible in Canada?

When it comes to tax deductions in Canada, there are three kinds of deductions that you can potentially claim on your taxes. These are: - Tax credits: Tax credits are a dollar-for-dollar reduction of the amount of income taxes you owe. You can only claim a tax credit if you’re earning enough income to pay taxes. - Tax deductions: Tax deductions reduce the amount of income on which you’ll pay taxes. Deductions allow you to keep more of your money, but can’t reduce your taxes below nil. - Tax relief: Tax relief amounts are one-time payments from the government to help reduce the amount of taxes owed. There are various types of deductions that you can claim on your taxes, and most of these are tax deductible in Canada.


Taxable income for a loss

If you incur a loss in a business or on an investment, you can claim a deduction on your taxes. You can claim a business loss if you’re running your own business or have a side hustle, or if you incur a loss on an investment, such as a stock that you’ve sold for less than you bought it for. You can claim a loss on your taxes from a business or investment, as long as you’re not trying to create a loss for the purpose of avoiding taxes. You can’t claim a loss from illegal activities or from a business or investment that you didn’t previously report as income. You can only claim a loss if the loss would be normal for that type of business or investment.


Capital cost allowance (CCA) recovery

If you purchased a depreciating asset for your business or investment, such as furniture, equipment, or a vehicle, you can claim a tax deduction for the cost of that asset on your taxes. However, you have to deduct the asset over a certain period of time, called the CCA. The CCA that you deduct on your taxes is subtracted from the original purchase price of the asset. You can claim the CCA on your taxes as a tax deduction in Canada, which means that you’ll be paying less taxes over the long term. A solid bookkeeping organization like Correcords Bookkeeping Inc. can help makes sense of this process and support you in your tax filing.


Employee tax tips: What you can deduct when working?

When you’re working and have employment income, there are a few deductions that you can claim on your taxes. Employees can claim a deduction for union dues and professional dues if these are related to your employment, and if you kept the receipt as proof of payment. Employee deductions don’t end there. You can also claim a deduction for your work-related travel expenses, work-related equipment, and work-related childcare expenses.


Conclusion

Taxes are never fun, but they are necessary. If you can save some money on taxes, it’s worth making the effort. The best way to do this is to find out what you can deduct and Correcords Bookkeeping Inc has a tax strategist on staff who can help with those questions. There are many things that you can write off on your taxes. Some of them are obvious, but others might surprise you. Call today (204) 202-6059 or visit our website at www.correcords.ca to book a FREE consult with Edward and chat about your tax situation.

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