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Tax Deductions

For many of us, April seems to be the most stressful month of all. April is tax season and that often means scrambling at the last minute to get our taxes in on time.

A lot of people take advantage of the fact that one can claim certain tax deductions on tax returns. However, many are not aware that donations can qualify as tax deductions and/or they are uninformed on how to claim them. Let us guide you through the tax procedure and inform you on where and how to claim your tax deduction donations on both the Canadian and American tax forms.

Basically, the government allows certain tax deductions from your gross income, which is the amount of income you earn within a year. The remaining balance is considered taxable income. Tax deductions reduce your taxable income. There are standard deductions or itemized deductions.

Standard deductions: The government provides the taxpayer with a predetermined (standard) deduction. In order to further decrease your taxable income, you must have deductions that exceed the amount of the standard.

Itemized Deductions: The taxpayer must provide the government with his/her list of tax deductions. Some allowable tax deductions are medical and dental expenses, home mortgage, donations to charity, non-reimbursable employee expenses, etc.

American Tax Forms: For American income tax, you must complete Form 1040 and itemize your tax deductions on Schedule A. Forms 526 and 561 are important as they help determine the fair market value of your vehicle. You will also have to fill out Form 8283 when filing your returns.

Canadian Tax Forms: For Canadian income taxes, you will have to fill out Schedule 9 (which is on slip T1).