The best tax advice that I can give to anyone who is filing their income taxes is to get a really good accountant. Don’t use generic tax services such as H & R Block. Ask your friends, neighbours, and co workers who they file their taxes with. My accountant was recommended to me by a co worker/friend 5 years ago and I have been a client ever since. Most accountants have access to the newest professional software on the market like intuits QuickBooks Online for accountants. If there is one thing in life that I really hate (other than the snow) it is paying income tax to the federal government.
My accountant gives me specific tax advice on what to do throughout the year in order to have a tax refund for the next year. The first time I saw my accountant he refilled my taxes from the previous year and instead of owing $500, I got a $1500 refund. Ever since that day I have been loyal to my accountant, I have referred him several clients over the years. I have also had a refund every single year that I have filed with him, even the year I was audited by the federal government.
According to an article on CNN Money the average tax refund this year is $3129, which is higher than last year’s average of almost $3000. The key to having a tax refund is deducting as many expenses from your annual income as possible. The basic tax deductions are contributions into our various retirement savings accounts as well as house related expenses and medical bills. In order to fully benefit from the maximum deductions possible we have to be totally open and honest with our accountant. We need to tell him everything about ourselves, even if you don’t think it’s relevant, tell him/her anyways. Remember that our accountant works for us, not for the federal government. His job is to get us the maximum refund possible.
I have an aunt who is self employed; she often works from home, even though she also rents an office space. My aunt deducts her dog food. How does she do it? She files her taxes with a really good accountant. I have several friends who deduct their personal trainer fees. Until recently cosmetic surgery was an allowable medical deduction in Canada. However, this changed with our recent budget revision. I guess I waited a year too long to get liposuction.
Here are some more outrageous expenses that people have tried to deduct on their annual income taxes according to CNN Money:
- Prostitutes. A lawyer in New York tried to deduct over $65,000 spent on hookers as a medical expense.
- Candy and Flowers for “Secretaries”. I use the term secretary lightly because in my personal opinion it should be replaced with the term mistress. A public defender in California tried to deduct the cost of gifts that he gave to his “secretaries” throughout the year. In my opinion if you can’t afford to have a “secretary” then you should go home to your wife.
- Sexy Underwear. A musician tried to deduct his sexy underwear as a business expense. I’m sorry did I miss something? Don’t we all wear underwear to work?
- Sperm. Yes you read it right, sperm. A doctor in Massachusetts tried to deduct his sperm donation for in vitro fertilization as a medical expense. Of course it was denied. Maybe he should have tried to deduct it as a charitable donation.
The most amazing thing about this article is that these are professionals, doctors and lawyers, who are trying to deduct outrageous and ridiculous expenses on their annual income taxes.
PS: If you don’t know someone who knows someone to help out w/ your deductions or taxes, using tax software will at least get you going (Places like TurboTax are good). It really depends on how much time you want to spend on it or not.
(Photo by SushiNa)