Hi Neighbour,
How do you deal with Income Tax? Well, I’m no saint, in that department. When I was working, my employer took taxes off every paycheque. That was great for me, when I didn’t have any complications, like extra private (contract) work, where no income tax was deducted, or donations to charities, which mean a reduction in taxes.
In fact, my history of completing and submitting my Income Tax Returns is horrible! Without my accountant putting a fire under me to give her all the documents and setting aside the time for a meeting to verify and sign the documents, I would never have filed my returns. I had the attitude that my income tax was already being taken from me, so why worry? That was all very fine, until she retired and I was left with no friendly (and forgiving) accountant.
So the years went by swiftly and soon I was receiving notices and even a phone call or two, reminding me to file my returns. The CRA person on the other end of the phone was very easy to talk to, but I still needed a fire under my butt… My excuses were somewhat creative and my working life was still very straight forward—no possibility of taxes owing, but also no possibility of a refund, if a savvy accountant had looked at my income and expenses.
Then I started donating to worthy causes. It made me feel good to contribute to charities or special projects of charities, until those charities started reminding me that they still needed donations to function. Oops! What have I started? The mail was too much! I had to limit my donations and decide which charities I would support each year.
When I decided to get a grip on my overdue Income Tax Returns, I organized all the documents I had saved in a filing cabinet—for which I commended myself, repeatedly—and learned that there was a limitation on how many years you could file, late, and still get a refund (if that was a possibility)… 10 years! Well, that was fire enough for me, with all the donations I had made. I also learned that you could lump 5 consecutive years of donations together and add that to the 5th year’s return. At the time, that meant more savings, because if you only donated, say, $200 per year, for 5 years, and declared $200 on each year’s return, you’d only get a savings of 20%/year ($40 x 5) for a total of $200. But if you donated $200/year for 5 years, and declared the total ($1000) in the 5th year, you’d get 20% for the first $200, plus 45.5% for $800 ($40 + $364) for a total of $404. Twice as much! H-E-L-L-O-oh!
Alexander Pope’s poem, An Essay on Criticism (1709), comes to mind:
“A little learning is a dang’rous thing;
Drink deep, or taste not the Pierian spring.”
I’m still drinking …learning.
Fiona