Thursday, April 24, 2008

Start getting your 2008 taxes ready today

With less than a week to go, many Canadians are scrambling to complete their 2007 tax returns befor the April 30 deadline. Million Dollar Journey is among these last-minute folks, and he has a great post today on keeping your paperwork organized to make tax season as painless as possible.

It would be easy to dismiss this kind of tip by simply saying "OK, I get it, I need to get more organized!" However, let's not forget the core piece of advice here: the best way to be organized a year from now is to get organized today.

Taxes are a fantastic example of something that happens at the same time every year, yet somehow manages to find a large section of the population completely unprepared. Whether they don't have their paperwork in order, or don't have the cash on hand to pay their tax bill, lots of people seem to be caught by surprise by their taxes. With some planning and some basic organization, this can be avoided.

Another example of this is Christmas shopping. Christmas falls on December 25th every year, but there always seems to be a last-minute scramble to buy the presents (usually on credit). Last year, I started saving for my Christmas purchases at the beginning of May, and I was able to pay for all my gifts with cash. This year, I've been saving since January, which should give me even more breathing room when the holiday season arrives.

It can be hard to force yourself into thinking so far ahead, but once you make the initial time investment to put the plan in place, it should save you having to think about it when tax time comes around next year. In 2008, I need to start repayments to my RRSP under the HBP and LLP, which means that, with my projected income and deductions for the year, I'll owe about $1,000 in taxes. Starting with my next paycheque, I'm contributing $40 every two weeks to my Freedom Account, specifically so I can cover this tax liability. Knowing I've planned for this will save me lots of stress a year from now, and I should be able to pay the bill without missing a beat.

There's really no better time than today to start planning for next year's taxes. Well, maybe six months ago would have been better, but today's certainly better than next April.

1 comment:

MillionDollarJourney said...

I am the definition of procrastinator. :) Thanks for the mention.