4 tips before you file your taxes this year
Best advice from P.E.I. financial advisers? Go to an accountant
Tax season can be confusing, frustrating and — especially for those who ends up owing money to the Canada Revenue Agency — draining.
To help out, CBC P.E.I. held a Facebook live where we asked P.E.I. Business Federation financial advisers Paul Trainor and Steven MacEachern the biggest questions readers had about tax season.
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Here are some their answers and best tips to keep in mind when filing your taxes this year.
1. Go to an accountant
Trainor and MacEachern agreed that when it comes to filing taxes, people should always go see an accountant.
"The biggest mistake people make is not go to an accountant and try to do it themselves. Because there's lots of areas that they could be able to claim that they might not know to claim," Trainor said.
MacEachern said accountants will be better at identifying where you can get the highest return.
"They are constantly updated on tax changes, deductions that are available ... even myself I don't do my own taxes," he said.
"By doing it yourself, and not necessarily everyone, you could be leaving money on the table that could be in your pocket."
2. Go with what you know
MacEachern said when it comes to choosing a good accountant, take recommendations from others into consideration.
"You have a family member or a friend that's had a good experience, that's a good way to do it."
3. Tax-free savings accounts or a registered retirement savings plan? Depends on your income
When it comes to investing a tax-free savings account (TFSA) or a registered retirement savings plan (RRSP), they said you have to look at your income first.
"The thing that people have to remember is an RRSP is a tax deferred investment, so you are going to pay taxes," MacEachern said. "There's no blanket solution ... but depends on your financial situation."
"With a tax-free savings account, certainly there's more flexibility," said Trainor, who recommends investing in a TFSA over an RRSP if you have a lower income.
4. Regular payments over lump sums
Saving can be difficult, but Trainor and MacEachern recommend starting a TFSA or RRSP as early as possible and to make regular contributions.
"There's two ways to make money. Either you work for it, or you make it work for you," Trainor said.
He said putting any amount of money away a month as soon as you're able will help you in the long-term and will help you get the best return possible.
For those who have difficulty saving, they say to set up automatic payments that will do the work for you.
"I have so many clients that are in their mid-40s, 50-years-old that wake up and realize, in 15 years I'm going to be retired and I have virtually nothing," MacEachern said.
"You should always pay yourself first," he said.
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