Navigating the confusing world of tax can be intimidating, but that doesn’t have to be your experience alone. Working with an expert tax professional will give you tailored guidance, maximize deductions and credits while adhering to tax regulations.
Tax consultants specialize in complex tax issues and long-term strategic planning, while tax accountants focus on the practical aspects of filing taxes. When used together they provide a complete solution for difficult financial situations.
Tax jargon
Tax terminology can be complicated, making it essential that you learn about it in order to make informed decisions regarding your taxes and save both money and avoid costly errors. Acquiring knowledge of tax terminology may also reduce confusion and anxiety during filing season, saving money while helping prevent mistakes from being made.
KPMG’s tax professionals understand the challenges businesses face meeting complex tax requirements, providing modern tax services, data-driven solutions and international consulting experience necessary for them to thrive. From digital workforce changes and post-COVID regulations to diversity tax planning needs – our professionals can help businesses navigate through them and reach their business goals successfully.
Our approach is tailored to meet the specific needs of your corporation or small business, from practical, timely advice that helps avoid potential pitfalls to comprehensive tax debt financing solutions for individuals and corporations experiencing financial difficulty due to Canada Revenue Agency demands. With thousands of individuals and businesses having used us as tax professionals over time, we pride ourselves on offering excellent customer service while producing results that are cost-effective, professional and on schedule.
Adjusted gross income
Adjusted Gross Income (AGI) is used by the IRS to assess your tax liability. It measures your total income minus specific deductions eligible to you – for instance contributions to eligible retirement accounts, student loan interest payments and alimony payments. Some states use AGI calculations themselves when determining their own state income taxes.
AGI is essential in calculating your tax liability; it serves as the initial step toward figuring out your total obligation, but isn’t the final figure that determines it. Therefore, understanding which tax credits and deductions you qualify for is also paramount to successfully managing the complex world of taxes. Working with a professional tax consultant is recommended in order to better navigate its complexities and maximize deductions and credits that apply.
AGI (Annual Gross Income) is calculated based on your annual total earnings from wages and salaries, interest, dividends, capital gains, business income such as rents or royalty payments for pensions and annuities as well as self-employment earnings or losses such as farm income (or losses), self-employment earnings or losses as well as self-employment earnings and retirement account distributions. AGI serves as a starting point for calculating your federal income tax liability on Line 11 of IRS Form 1040 as well as eligibility criteria for certain programs or deductions such as premium tax credits for marketplace health insurance plans.
Itemized deductions
Itemized deductions are an effective way of lowering taxable income by subtracting eligible expenses from total income. They may help ease your tax burden and maximize refunds; however, professional advice should always be sought to make sure that any deductions claimed are valid and legitimate.
Itemized deductions may include medical and dental expenses, state and local taxes, mortgage interest payments, charitable donations, unreimbursed business expenses and unreimbursed alimony payments or rent paid for properties used for your business. You should consult the CRA website for more details regarding itemized deductions available to you.
In general, itemized deductions outweigh standard deductions; however, this varies year to year. With tax reform nearly doubling your standard deduction, itemizing may no longer make financial sense.
To properly file itemized deductions, it is essential that all relevant documents and receipts be collected in order to file itemized deductions. These may include medical records, property taxes statements, mortgage interest statements, charitable contribution receipts, etc. Additionally, copies must be kept of these documents for seven years after filing them with CRA; additionally use their guidelines on what expenses qualify and the amounts deducted – please visit http://canada.ca/en/tax/guides-forms/forms-paperwork/index.html to learn more.
Tax credits
Tax credits can help lower your tax bill and allow you to keep more of what’s yours. There are incentives for home energy improvements, educational expenses, medical bills and savings through pre-tax retirement accounts; consult a tax consultant for more details about how these incentives could apply to you individually.
Tax credits should be differentiated from deductions in two key ways. First, deductions reduce taxable income – and their value varies with your tax rate as your income does – while tax credits directly reduce one’s tax liability; dollar for dollar they reduce taxes which means credits offer greater benefit than deductions.
Some tax credits are refundable, providing cash refunds even if there are no outstanding liabilities for taxes owed. Examples of such credits are Earned Income Tax Credit for low-income households and Research and Development (SR&ED) Tax Credit which offers incentives to companies conducting eligible R&D activities.
As the SR&ED program can be complex, it is wise to seek assistance from an experienced and qualified consultant in order to reap all possible advantages from it. A professional SR&ED tax advisor can assist with business tax planning, corporate filings and communicating with the Canada Revenue Agency on your