Tax Season: Are You Making the Most of Your Deductions?

Taxes—for some of us, just hearing that word can bring on anxiety. Many of us prefer never to think about taxes at all. But did you know that there are ways to reduce the amount of tax you owe? That’s right, we’re talking about tax deductions, and if you’re not taking advantage of them, you could be leaving money on the table. In this blog, we’re going to explain what tax deductions are and how you can use them to keep more money in your wallet. And don’t worry, we’re going to keep this as simple and painless as possible.

What are tax deductions?

Think of tax deductions as the part of the tax code that allows you to subtract certain expenses from your taxable income. In other words, they can help lower your overall tax bill. However, most tax deductions are not automatically applied; to access your deductions, you’ll have to file your taxes and request a refund. Don’t let that extra step scare you off though; the process is user friendly, and you can end up getting a lot of cash back.

What tax deductions are available to me?

Personal Allowance
Your personal allowance is like a little gift from the government that lets you earn a certain amount of money without having to pay any income tax on it. This allowance is subtracted from your total income before calculating how much tax you owe. As of the first of January 2023, the personal allowance is $90,000. Your personal allowance will be automatically calculated when filing taxes, so you don’t need to apply to access it.

Annuities
One deduction that often gets overlooked is contributions to annuities. Now, I know what you’re thinking—annuities sound like something only finance wizards would bother with. But hear us out, because contributing to an annuity is a really smart move for your financial future and your tax bill. An annuity is basically a long-term investment that provides a steady stream of income in retirement. And here’s the kicker: contributions to registered annuities are tax-deductible in T&T. That means that for every dollar you put into your annuity – up to a maximum of $60,000 – you can subtract that amount from your taxable income. It’s like getting a double benefit—saving for retirement and saving on taxes.

First time home ownership

Did you just build or buy your first home? Congratulations! And the good news just keeps on coming because you can also claim a tax deduction of $30,000 for the first five years. To receive this deduction, you need to have the right documents:
1. A copy of the Completion Certificate or Deed of Conveyance, depending on whether you built or bought the property.
2. Proof of ownership.
3. A Certificate of Assessment.
4. An original statement from a financial institution or an affidavit confirming that this is a first-time acquisition, stating the date that the property was acquired.

Charitable Donations

Maybe you make donations to a charity or your place of worship. If you charitable organization is approved by the Ministry of Finance, you’re eligible for a tax deduction. To get that deduction, you’ll need to produce a proof of payment and a copy of the Deed of Covenant, which sounds fancy but it’s just the document that shows the organization is Ministry-approved. Most registered charities and religious organizations can provide these documents easily, so you can continue to do good deeds and you can lower your tax bill at the same time.

So, there you have it—tax deductions demystified. Of course, these are just a few examples of the tax deductions available to you; there are plenty of others out there. If you want more help, remember, you don’t have to navigate tax season alone. Why not reach out to a financial advisor? You work hard for your money, and you deserve to keep more of it in your pocket, where it belongs. You may not think of tax season as a happy season, but if you take advantage of tax deductions, you may end up smiling from ear to ear at the end of it.

Maritime Life offers personalized Annuity plans to suit your needs. To get started, contact clientdev@maritimefinancial.com or your Financial Advisor for more information.