Financial Tips For Tax Time

It's tax season, so many people have a lot to do throughout the month of April. If you are a homeowner and are like the majority of other homeowners, you are probably curious about the tax deductions that are available to you. The following are a few pointers that will assist you in getting started. To begin, it is imperative that you maintain an accurate record of all of the costs associated with your house throughout the course of the year.

This consists of expenses such as the interest on a mortgage, property taxes, as well as home repairs and maintenance charges. Upgrades to your home's energy efficiency and the costs associated with moving could both qualify as potential tax deductions for you. Finally, if you have any issues or require assistance in preparing your return, don't forget to seek the advice of a tax professional. Keeping these pointers in mind will allow you to unwind and concentrate on taking advantage of the pleasant spring weather.

The time of year when taxes are due may be an unpleasant and confusing time for homeowners. You may, however, make the process a great deal simpler for yourself by acquiring some additional information and being adequately prepared. This blog post will give you with some helpful hints to assist you in filing your taxes in a timely manner and maximising the amount of money that you are entitled to receive as a refund. Read on for some ideas that will make the process of doing your taxes less stressful, regardless of whether this is your first time as a homeowner or whether you've done it before.

Helpful Financial Advice for Tax Season

As the current fiscal year draws to a close, it will soon be time for taxpayers all around the country to start filling out their return forms. Whether or not an individual's income is high enough to trigger tax liability, they are still required to file a tax return for a variety of reasons, regardless of whether or not their income is below the threshold that triggers tax liability. In order to provide you with assistance as you navigate the process of filing your taxes, we spoke with Nikki Booth, a financial adviser at My Wealth Solutions, about the significance of making a budget and making plans ahead of time, as well as the necessity of getting advice from a trained professional.

Reminiscing on the Past Calendar Year

When you are getting closer to the 30th of June, which marks the end of the fiscal year, it can be good to think back on the expenses you incurred the previous year. Nikki believes that reflecting on the past fiscal year can be helpful in making appropriate preparations for the future. This is true whether or not your working days are far behind you or whether or not you are just about to retire.

If a retiree is over the age of 60 and receiving an account-based pension, none of their income or earnings are subject to taxation. As a result, pensioners typically do not have a significant amount of taxable income, if any at all. It is highly recommended that you reflect on the amount of money you spent over the course of the previous year so that you may make accurate plans for the upcoming fiscal year.

It is also a good opportunity to consult with an accountant about your superannuation situation as well as any other investments or assets that you could have at this point in time.

It is of the utmost importance for retirees who get a pension from an account to check that they have taken out the required minimum amount of money by the end of the fiscal year. If you have investments outside of your superannuation plan that have created income that is subject to taxation, having a conversation with your accountant about strategies to reduce the amount of tax that must be paid on these assets will also be advantageous.

Another factor that should be taken into consideration is whether or not you are content to spend all of your money or to leave some of it for the children. This also requires you to consider whether or not there are any tax implications for the estate's money and how they might be minimised for your children when they receive the inheritance.

Prepare For The Future

Those who hope to enter retirement within the next several years should start planning their finances as early as possible. This involves making sure that your post-retirement living expenses are manageable and that your retirement account has enough money in it so that you may live comfortably.

If you want your money to endure as long as possible, you will need to take into account the costs of living. In the years running up to retirement, you should put as much money as you can into your retirement account, as this is the environment in which your money will be subject to the lowest possible tax rate. If you are under the age of 65 or following the downsizing rule, you should think about whether or not there is room for any more contributions to be made into the super environment.

During retirement, those who are receiving a super pension or income stream are required to withdraw minimum sums each year. Depending on the age of the recipient, these percentages can range anywhere from 4 to 14 percent. Check to see that the required portion of the pension has been paid out. Also, if there are any funds that are still in the accumulation phase, you should evaluate whether or not it is necessary for those funds to remain in the accumulation phase, or whether or not they would be better off in an account-based pension.

Make Yourself Successful

Your pension and investment income will account for the vast majority of your cash inflow throughout retirement; however, your cash outflows, which include essential living expenses such as property taxes, insurance premiums, utility bills, and telephone charges, are likely to be rather high.

You've put in a lot of hard work throughout your entire life; now it's time to relax and enjoy your retirement without worrying about whether or not you'll have enough money. It is essential to create a straightforward budget that accounts for your incoming and outgoing cash flow if you are already retired or if you have retirement plans in the near future. This will make it possible for you to keep track of your spending patterns, which in turn will enable you to confidently plan for the future in your life.

Prepare a sensible spending plan that you can stick to, one that takes into account not only the essential costs of living but also the "like to haves." Treat the income from your pension the same way you would a wage from an employment source, and divide it into two accounts for your fixed expenses and your discretionary expenses. This will help you avoid overspending your pension income.

You also have the option of trying to amass money by investing in tangible things, such as real estate or stocks and shares. These investments have the potential to both increase in value and produce a consistent income for the investor. Additionally, if you borrow money to purchase these assets, the interest that you pay on the loan is typically an expense that can be deducted from your taxes.

Ask for Financial Guidance

When it comes to managing your assets during tax season, it might be helpful to enlist the assistance of a qualified financial consultant or a licenced tax adviser who can point you in the correct way. They will also be able to advise you on whether or not you are eligible for any benefits to supplement your income, as well as how you may apply for those benefits.

Because the possibility of outliving one's savings during retirement is one of the most significant dangers that one faces, it is essential to have the assistance of a professional in order to make the most of one's resources and to guarantee that one's requirements are satisfied. They will also be able to assist you in maximising the benefits that you are entitled to get from any social security programmes that you may be eligible for.

When it comes to ensuring that you get the most of your money through investments, Nikki believes that a financial planner is the most competent person to provide the appropriate guidance.

If you have a skilled adviser, they will be able to assist you in effectively structuring your assets during retirement so that you can maximise growth while simultaneously minimising risk of loss.

Nikki recommends, as a final step, beginning the search for a reliable consultant a significant amount of time in advance, even if retirement is still a little speck on the horizon.

Even if you are 15 to 20 years away from retirement, it is never too early to start looking for a financial counsel. The earlier you start, the better. It will make a significant amount of additional time available to put the appropriate infrastructure in place for the future.

As the end of the fiscal year draws near, now is the ideal time to reevaluate your financial situation and plan for retirement so that you can get the most out of the money you've worked so hard to achieve. After all, you've already planted the seeds; it's time to start gathering the crop!

Tax Advice From the Pros at the Close of the Fiscal Year

The end of the fiscal year (EOFY) is significant in more ways than just the purchases that take place in the local shopping centre. Additionally, this is the final opportunity for Australians to make any decisions regarding changes to their personal finances that may have an impact on their upcoming tax return.

Consider the following tax advice before the end of the fiscal year sneaks up on you.

Maintain Accurate Records And Gather Your Data As Soon As Possible

If, at the end of June, your financial information is a complete mess, make it a priority to get it all consolidated and in order by the beginning of July. Even if you intend to put off doing your taxes until a later date (in most years, you have until the end of October), it is in your best interest to have all of the relevant information regarding your income, assets, expenses, and deductions ready and waiting for you when the time comes. This will save you a great deal of time as well as anxiety.

You should also think about taking measures to keep your financial concerns organised for the following fiscal year, as this will make the process of preparing for the next time you have to file your taxes much simpler for you. If you perform a thorough assessment of your financial health, you may not only be able to make the process of managing your taxes in the future easier, but you may also be able to save money and get greater value from the financial goods and services you use.

Be Sure to Review Your Deductions

Depending on the specifics of your circumstances, you might be able to take advantage of additional tax deductions than you first thought, such as:

• Donations to charities: Being generous with your giving not only benefits those who are less fortunate but also may qualify you for a tax break.
• You can deduct the cost of your income protection insurance premiums if you pay them to an insurer in the event that you suffer a loss of income and include the amount deducted on your tax return. This only applies to income protection policies that are purchased on their own separately from other types of insurance, such as life insurance or policies offering similar benefits.
• If you use a portion of your house as a workplace, you may be eligible to deduct a portion of the cost of your homeowner's insurance premiums from your taxable income as a business expense.
• Working from home: If you have spent a significant portion of your working hours at home during the current fiscal year, you may be able to claim your home office expenses on your taxes. These expenses can include things like your electricity and internet bills, as well as any office supplies and equipment you use. You have the option of laboriously tallying up the actual costs of your work-from-home expenses or taking the shortcut of claiming a predetermined number of cents per hour worked.

Before the end of the current fiscal year, there are a lot of shady things that may be done to try to get one over on the tax collector. Don't risk it. The possible cost reductions are not worth the possibility of being arrested, prosecuted, or sentenced to prison for fraud or tax evasion.

Avoid Purchasing Deductibles You Don't Need

Making some last-minute job expenses in June so that you can claim them as tax deductions in July is a frequent method for end-of-fiscal-year (EOFY) planning. On paper, this may make a certain amount of sense, but in practise, it would involve spending money when there is no real requirement for you to do so, which is rarely a good strategy.

On the other hand, if you already had the intention of making a tax-deductible purchase in the months of July or August, you might be able to pre-pay the cost in June and claim it on your taxes for this year, rather than having to wait until the next year.

Examine The Interest That You Have Accumulated On Your Term Deposit Or Savings Account

You might have earned interest on your savings over the fiscal year if you have money stashed away in a savings account and you have been making regular deposits without withdrawing them in order to be eligible for the higher bonus rate. If you have a sizable amount in your account, you may still have earned enough interest over the fiscal year for the tax office to take note, even if interest rates on many savings accounts and term deposits are on the low side.

When you try to submit your tax return online, information related to interest collected on your savings accounts or term deposits will frequently be pre-filled. If not, you should be able to acquire a summary of your annual interest payments by getting in touch with your bank.

Think About Making Voluntary Contributions to Your Superannuation

The tax rate that applies to the money in your superannuation account is typically lower than the tax rate that applies to the rest of your income. You might want to consider contributing some of your salary to your retirement savings account if you haven't previously done so. You can lower your overall taxable income, which in turn can have an effect on the amount of tax that you are required to pay by having a portion of your pre-tax salary transferred directly into your superannuation fund.

When you file your taxes, you may be eligible to claim deductions for additional personal payments to your superannuation fund that come from your income after taxes (for example, your take-home paycheck).

Determine the Revenue And Expenses That Come From Your Investment Property

It's possible that investing in real estate will qualify you for a number of specialised tax deductions that you can choose to take advantage of, including the following:

• Costs of maintenance and administration
• Costs associated with your mortgage loan, including interest
• Insurance for the home

If obtaining an investment house loan required you to pay any upfront costs, including establishment fees, stamp duty, or Lender's Mortgage Insurance (LMI), you may be eligible to deduct these costs from your taxable income. When filing taxes, you can deduct expenses that are less than $100 in the year they were incurred, while larger expenses can be deducted over a period of five years or more.

If during the fiscal year you made more money from the property than you paid out in expenses, then your property is said to be positively geared, and you may be required to pay income tax on the money you made from it. However, if you have a negatively geared property, which means that you have paid more in expenses than you have received in income, you may be able to minimise the amount of income that is subject to taxation.

Some real estate investors opt for the negative gearing method so that they can enjoy tax benefits in the short term. They do this with the expectation that the appreciation of the property's value will make up for any losses incurred in the long term. Seek the guidance of an impartial financial expert before embarking on a negative gearing strategy, as this type of investing can be risky if the local market for real estate does not improve.

Remember to Account for Depreciation When Purchasing Investment Property

When you buy a house for investment purposes, the purchase price could also include a variety of amenities, such as the carpeting, curtains, and appliances in the home. It is possible that over time, the value of these things will decrease because they will be utilised by renters and will be subject to wear and tear. It's possible that you can take a tax deduction for this depreciation that you've incurred.

Because calculating depreciation is a difficult task, you should think about getting in touch with a quantity surveyor so that they can do it for you. In addition to that, you are able to deduct their cost from your expenses for the next year.

Determine What Vehicle Expenses You Can Deduct

The majority of individuals are aware that if they use their own automobile for work-related purposes, they can make a claim for their vehicle expenditures; however, these may be limited to simply the travel that they do for business (not counting their commute to and from work).

If you are self-employed or run your own small business, you might be able to deduct some of the additional costs associated with vehicles that you use for work, such as the interest you pay on car loans and the premiums you pay for car insurance, as well as the registration fees and the vehicle's depreciation. It is possible that you will be able to deduct only a portion of these costs if you use your vehicle for work purposes only a portion of the time.

There may also be tax advantages to getting a chattel mortgage or entering into a novated lease in order to finance the purchase of a work car.

Check to See If You Are Eligible to Receive Reward Points If You Pay the ATO With Your Credit Card

If, after completing your taxes, you discover that you owe money to the government, you might wish to put the total amount due on a credit card. It is a speedy and uncomplicated method of payment, and if you use a credit card that offers rewards, you may perhaps rack up some points that you could later use to get discounts on future travel, right?

Okay, so maybe not. There are some banks and other providers of credit cards that specifically exclude government payments from the possibility of earning credit card reward points. These payments can include everything from tax bills to parking fines and council rates. You run the risk of pushing yourself into debt, which could result in paying interest at a high rate while receiving no points in return for your efforts.

Check the terms and conditions of your credit card to determine if there are any limitations or other restrictions before using it to pay your taxes. Using a credit card to pay your taxes may subject you to additional restrictions.

Clever Strategies That Can Save You a Significant Amount of Money During Tax Season

As we once again approach the conclusion of the fiscal year, we would like to take this opportunity to discuss with you 22 effective strategies that can assist you in reducing the amount of money you owe in taxes. After all, we wouldn't want you to be handing over money to the government that you could be keeping for yourself in lieu of paying taxes.

The items in this list are applicable to personal tax savings as well as tax savings for businesses. After reading through the several strategies to cut costs that have been offered, schedule a meeting with a tax consultant to go through your alternatives and possible tax deductions.

Reduce Your Tax Liability with Deductions

• Instant asset write-offs.  Instant asset write-offs of up to $150,000 may be available to certain types of small and medium-sized businesses. The Instant Write-off Scheme now has a higher threshold, and it can be utilised an unlimited number of times for an unlimited number of assets.
• Write off bad debts. You may be eligible for a tax deduction or the full amount of the debt in the year that you choose to write it off if the debt is old and cannot be recovered. Before you make this claim, you should make sure that you have performed the necessary amount of research and that you have satisfied all of the requirements.
• Remove this item from inventory. If you write off inventory because it is outdated, has a poor turnover rate, or has been stolen, your company may be eligible for a tax benefit.
• Donate any items that aren't being used. Instead of paying cash for storage, consider making donations of unsold or unwanted inventory to receive tax deductions. Donations of money, supplies, and property made by a business are all regarded as tax-deductible business costs. It is important to take note that contributions of products valued at more than $500 may be subject to additional regulations.
• Before the 30th of June, pay for specific expenses. If you have any extra money lying around, you might be able to speed up the process by which the ATO gives you your tax refund. In contrast, expenses paid in July may need you to wait more than a year for the return on your investment.
• Pay the interest on investment loans ahead of schedule. However, you must exercise caution because not all expenses are eligible for a tax deduction in advance.
• Make interest prepayments on an investment property. If your circumstances do allow you to push forwards this deduction, make sure to get in touch with the bank as soon as possible.
• Claim work-related expenses. This year, the ATO is putting a particular emphasis on work-related costs. If you intend to submit a claim for expenses associated with things like a home office, mobile phone, tools and equipment, and so on, you must ensure that you are submitting only acceptable expenses and that you have the documentation to support them.
• Insure your income. You are eligible to receive a tax deduction for the premiums that you have paid for your income protection insurance. It is essential to keep in mind that the only element of the premium that you may submit a claim for is the one that compensates you for a loss of income. Claims cannot be submitted for any benefits of a monetary kind. It is not possible to deduct the cost of premiums paid for other types of personal insurance, such as life, critical care, or trauma coverage. If your policy is kept within your fund, you won't be able to deduct any of the premiums you pay from your contributions to your superannuation account, either.
• Pre-pay expenses.  Conduct an analysis of your expenditures to identify which of your upcoming costs for the year 2020, such as rent, insurance, or subscriptions, may be paid in advance. If you qualify as a Small Business Entity (SBE), you may be eligible for a tax deduction for expenses that you prepay that will apply to the following fiscal year. In order to qualify for this deduction, the prepayment must have been made before June 2020 and it cannot cover a period of time longer than one year. In order to be considered a small business entity (SBE), a company must first be actively engaged in business and have an annual gross revenue that is less than $10,000,000.
• Make use of the tax offset on income. There is a possibility that you could qualify for the small business income tax offset even if your small firm is not incorporated. If your annual income is less than $5 million, you might save up to $1000 thanks to this. The current amount of the offset, which reduces the amount of tax that must be paid on your business revenue, is 8%; however, that percentage is expected to rise to 16% by 2027.
• Deduct home office expenses (for home-based businesses). The interest on a mortgage or rent, council rates, land taxes, house insurance premiums, and operating expenses are only some of the things that could qualify as deductible expenses. Again, double check that you are only reporting legitimate expenses and that you have the supporting documentation on hand.
• Keep tabs on and deduct the costs of your vehicle. When utilised for work, automobile expenses are eligible for tax write-off. In order to take advantage of this deduction, you will need to keep track of your mileage and determine the proportion of that mileage that can be attributed to your company.
• Maintain accurate records of your tax deductions and carryovers. Capital losses, nett operational losses, deductions for a home office, and big charitable donations are all tax write-offs. All of these are examples of different kinds of deductions that can be carried forwards to a year after the current one. Tracking and recording these deductions can help you remember them for the following year, so make it a priority to do so.
• Rental property tax deductions. When you invest in real estate, you can reduce the amount of taxes you owe on your profits by taking advantage of the tax deductions that apply to rental properties, all while increasing your flow of cash.
• Pay all of your taxes on time. Make sure that your tax assessments are sent in before the deadline in order to avoid incurring late fines.