Why You Need to Understand Tax Incentive Rules
We are always promoting that every tax payer should take advantage of any potential tax breaks that they can qualify for. Whether it is ways to reduce your tax rate, or credits that you are missing, or other incentives, they can all add up to give an individual some substantial tax breaks.
One of the biggest reasons why so many people miss out on these tax breaks is often because the rules and regulations, or even the explanation of them is so complex that they become frustrated in trying to comprehend them, then apply them to their particular tax situation. For those that use accounting services to handle their tax matters, usually the accountant can put them on the right track for what they are eligible for.
One potential tax break opportunity is the TFSA (Tax free savings account). This is a golden tax opportunity for those who want to save a little and can do so by utilizing some tax free dollars. While many look at RRSPs as a great way to build a nest egg for the future, many younger people tend to put this type of potential tax break aside because the rewards of it seem too be too far off in the future. The TFSA seems to be a more here and now type of incentive. The funds that are being saved can be utilized if need be, but there are some restrictions and regulations regarding this, and at present this is leading to some confusion.
Each year the government sets a limit of how much money you can put into your TFSA, for example the limit for 2014 is $5,500. As said, like with any of the other tax incentives there are rules and regulations that must be followed. The current mix up regarding this particular program is in regards to when you can re-deposit funds that you may have previously taken out, without being penalized or taxed on the amount.
Being as there can be so much confusion not only around the TFSA, but other tax savings programs it is wise to let your accountant determine what you may be eligible for, then assist you with understanding what the limitations are concerning that program. Every penny counts when it comes to tax savings, and that is just one area of your tax matters where relying on an accountant can be a good decision.