Tax Preparation and Money Coach

Financial Lessons Learned from My Recent Trip Abroad - December 2024 Prudent Money Coach Tax & Money Tips

1/12/2024

Photo by Walter Chávez on Unsplash

Greetings! Can you believe that we are now in the last month of 2024? Did you accomplish any goals you set for yourself?

Recently I had an opportunity to visit my parents back home. It was a privilege to still have both my parents with me and to have an opportunity to sleep in my childhood home, in a bedroom I used to share with my siblings. Now that I’m a professional dealing with money and taxes, I look at things through different lenses. Here is some interesting money-related information that I learned/ encountered from my two-week trip.

While it is possible to claim “donation tax credit” back home, many people are not doing it due to the complexity involving tax reporting. If you live in Canada, be thankful that claiming donation tax credit is quite straightforward and easy.

When you rent, generally you pay first month’s rent and a deposit equivalent to a month’s rent, which may be applied towards your last month’s rent. Did you know that if you rent a whole house in Indonesia you would need to prepay your 12-month rent? Wow! I wish I could interview renters and ask how they come up with that much cash. And did you know that some landlords even use multi-year leases? You get to lock in your rental cost, let’s say for 4 years, but how will you come up with all the cash that is equivalent to 48 month’s rent? I believe this requires creative financing, perhaps involving financial help from extended families.

In developing countries where money is tight, it is very common for extended family members to help each other out. However, whenever money is involved, it is usually a bad idea when agreements are not in writing. One person’s memory may be different from others. It may become a he said/she said situation. A record that shows detailed information such as date of transaction, agreement between parties, amount involved, etc. may help avoid conflicts. Bonus if it is a legal paper so it can be enforced.

When you lend someone money, it may be best to treat it like a gift with no expectation of payback. If you do get it back, that’s great; if not, you won’t be disappointed.

When you give someone money, it is not yours anymore. The recipient is free to give the money to anyone, including someone you would’ve disapproved of. So, give wisely. I have seen so many examples of this. Here is one example: an adult gives money to her adult brother, to help with day-to-day expenses. But the brother spent it on gambling. In this example, it may be best to give the money directly to her niece’s school to pay for tuition, or to purchase groceries directly and deliver it to the brother.

Do not mix business and personal, especially when it is a family business. There should be an agreement on how much each person is entitled to have periodically; for example, $5,000/month/person. It is best to have more than 1 person to approve business expenses, for example, 2 signatory authorities; this way, no individual can freely spend business money.

There are so many more money lessons I learned, which apparently are quite universal. If I may summarize: When money is involved, it is usually best when there is a record-keeping and accountability partner(s).

Wishing you and your family a very Merry Christmas and a Happy New Year! May you encounter peace and joy from Christ.

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Various Tax & Money Tips - October 2024 Prudent Money Coach Tax & Money Tips

9/10/2024

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Photo by Debby Hudson on Unsplash

Happy Thanksgiving everyone! I hope you and your family are well. I can’t believe it is already October. I am grateful for many things - health, family, friends, home, etc. I am sure you have many things you are thankful for. 🙂

This past summer I had an opportunity to do some networking and I am happy to report that I recorded a few reels with a tax lawyer and with a DIY (Do It Yourself) investor, asking them to share money-related tips. This newsletter is longer than usual because I want to share the tips with you.

Here are tips from Anna Malazhavaya, a tax lawyer from Advotax Law in Toronto.
Q1: When should you see a tax lawyer?
A1:
1. If your accountant (or tax professional) asked you to.
2. If you want to maintain SCP (Solicitor Client Privilege) - where a client can communicate candidly and in confidence with his/her lawyer.
3. If you would like to receive comprehensive tax advice.

Q2: What should you do if you are audited by CRA (Canada Revenue Agency)?
A2:
1. Hire a professional who can advise you on what you should or should not provide to CRA.
2. Budget your time to collect documents that CRA requests.
3. Do not ignore the time limit set by CRA. If you need more time, request it from the CRA auditor.

Here are tips from Bilaal Dhalech, a DIY investor.

Invest regularly, for example $25/week or $100/month.
Buy Exchange-Traded Funds (ETF), which is a basket of securities that can be bought and sold like an individual stock. An example is VFV, which is Vanguard S&P 500 Index ETF. It is a stock index that tracks the share prices of 500 of the largest public companies in the United States.

Here are my tax tips for students, which were originally scheduled to be published in September.

Even if a post-secondary student has no income or minimal income from a part-time/summer job, he/she should still file his/her tax return to claim tuition amount paid as a tax credit. Students can claim tuition tax credit even if someone else paid the tuition fees.

If the tuition tax credit is not needed to reduce the student’s taxes, there are options for the credit.
1. Transfer all or a portion of the unused federal and provincial tuition tax credit to a spouse (or common-law partner), parent, grandparent or spouse’s (or common-law partner’s) parent or grandparent.
2. Carry-forward the unused tuition tax credit for the student’s future use.

If you pay interest on your post-secondary (federal) student loan, you may be eligible to claim the interest you paid for that year or the preceding 5 years even if someone else is paying the student loan. Make sure you have a statement showing the interest you paid. The statement should also show that it is a document you can use for your tax return.

You may be eligible to claim moving expenses if you have income that is required to be included in your income. There are requirements to be met. See the link in the sources below.

That’s all for now. Due to my workload, I may not be able to publish a November newsletter. So see you in December.

Sources:

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Tax Specialist
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Financial Lessons Learned from My Recent Trip Abroad - December 2024 Prudent Money Coach Tax & Money Tips

Various Tax & Money Tips - October 2024 Prudent Money Coach Tax & Money Tips

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Financial Lessons Learned from My Recent Trip Abroad - December 2024 Prudent Money Coach Tax & Money Tips

Various Tax & Money Tips - October 2024 Prudent Money Coach Tax & Money Tips

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Tax Specialist
and Money Coach