Amber's Case Study - Large income tax refund and money saving tax planning advice
by The Tax Doctors
A recent university graduate came into our office recently. She was well educated and embarking on her career as a nurse practitioner. She was behind in filing her income tax returns. She also wanted some analysis on her financial planning.
We prepared her last two years tax returns. She was an employee with no benefits and paying for her own expenses. However, she wasn't deducting these expenses. We asked her to obtain a declaration of employment conditions (T2200) from her employer. This would allow her to deduct her vehicle expenses, office supplies and home office costs; resulting in big savings - about $3,000 in tax refunds.
After reviewing her financial plan, we noticed a few things. She was contributing to her RSP and Tfsa's. Not a bad idea in most cases; however, Amber had considerable debt at high interest rates. Amber had her RSP and Tfsa in a low interest savings account making a low rate of return. The interest rate on her debt was approximately 10%. We advised her to stop making the RSP and Tfsa contributions and focus on reducing her debt. A savings of about 9% (10% less 1%) a year.
Amber had no benefits I.e. disability, critical illness or life insurance coverage. Amber noticed the she was weak in her risk management. She understood that it is important to protect her biggest asset, herself ie. the ability to earn a living. She applied and was approved for life, critical illness and disability coverage.
Another example of how the accountants at Tax Doctors Canada can make a difference and save their clients money on their income tax returns. They see the big picture and make sure you have the right tax strategies in order to minimize your tax burden.
Don't settle for less, contact Tax Doctors Canada for a free no obligation consultation or call toll free at 1 855 TAX DOCS (855 829 3627). We have 3 convenient locations in the GTA to serve you.