2013 Tax Planning, What Can You Do Now?

Happy New Year 2014.

Yes, it’s a very happy new year for taxman.

Your income is going to be taxed more, starting January 1, 2014. If you are an employee, you will see your net take home income going down a bit, because of increased contribution of CPP and EI.

As I was reading my Daily Newspaper on January 2^nd, I saw a news headline “Now is the best time for Tax Planning” featuring a prominent tax expert. I thought he was referring to 2014 tax planning, now is the best time to plan ahead of how much tax you would like to pay in 2014.

To my surprise, in the article, he was mentioning about tax planning for 2013. He must have a time machine, to plan for 2013 taxes after January 2^nd, 2014.December 31^st, 2013 is the last day of your 2013 tax planning (unless you are a corporation). Beside contributing to RRSP, there is no tax strategy available to reduce your tax burden for 2013, after Dec. 31^st, 2013.

This is the same trap 99% of tax payer fall into, every year. By focusing all their energy into spending at the end of the year, 99% of tax payer, miss the massive opportunity of tax savings. So, come April, they part with 29% to 43% of their 2013 income to taxman,

What the 1% does? They spend last two months of the year, reviewing their past 10 months income and taking every opportunity to plan their 2013 tax, so they can keep taxman’s hand off their pocket. If they are at the top income tax bracket of 43% , with tax planning they can bring it down to 22%, they just increased their 2013 income by 21%. They don’t wait to file their tax till end of April. They file their tax return as soon as possible, because, it’s a huge payday for them.

The opportunity for 2013 tax savings is gone, with the arrival of New Year. If you don’t want to pay at the highest rate at your income, plan for it, make tax day and huge pay day for you.