Useful Tips for Dealing with Tax Debt Problems

Posted by Accufile  on January 17th, 2020

Of late, there is growing number of people finding themselves, owing tax debt to the Canada Revenue Agency for some reason or the other. While, people, working for one specific company have their employers remit their taxes directly to the Income Tax department, it is the ones who work for multiple employers which face tax debt problems. The reason being, one employer does not know about the other, thereby landing their employee in a tax liability mess at the end of the year. Also, pensions received from several sources can lead to huge income tax debt problems as well.

Listed herewith are few tips and guidelines as to how one can avoid income tax debt issues.

Timely filing of taxes

Ontario Trillium Benefit, by doing so, one can avoid facing fines or penalties, due to delayed filing of taxes and accrued interest for owing money to Income Tax department.

Be informed about your tax bracket

Owing taxes at the end of each financial year is likely due to the fact that, you are in a higher tax bracket, which you are most probably unaware about. Hence, you would need to do a thorough research about the same, especially those having multiple sources of income, so as to get to the depth of the problems. Also, making tax payment in installments can help a person avoid tax liability at the end of the year.

Awareness about varied deadlines for self employed

Income tax department always extends their tax filing deadlines, especially for the self-employed. However, not many are aware about this fact and hence end up with tax debt at the end of the year.

Avail services of a professional

File Taxes Online is best left to professionals, especially for those, who lack knowledge about bookkeeping and preparing tax returns. However, by learning the tricks of the trade from a professional hand, one can easily migrate to doing tax filing procedures on their own.

Make investments wisely

There are certain investments which help in lowering your taxable income and thereby reduce the overall amount you need to pay as taxes. Investing wisely serves twin purposes namely, lowering tax amount and making you eligible for tax refund.

Eliminate tax debt through bankruptcy

In order to eliminate your tax debt, filing for bankruptcy is one of the most ideal options, albeit when done on time. One should file for bankruptcy before the tax department can file a tax lien on their property.

Ignoring tax debts can be a tough call for you to take as it will not prevent the Income Tax department from trailing you.