YELLOWPAGESLOANS.COM

With many people anxiously awaiting their refund from the Canada Revenue Agency, now is a great time to think about how you can spend that tax return. The biggest mistake one can make is to look at the refund as free money. A tax refund is NOT free money, it’s YOUR money! When you view your refund as something other than a paycheque, you’re more likely to spend it on treating yourself. Of course, there’s nothing wrong with treating yourself but here are just a few smart ways of spending your tax refund.

Credit Card Debt – If you’re getting collector calls then you know that ignoring them won’t make them go away. Use your refund to take care of those late payments. If you’re current on your bills, why not bring down or pay off your credit card debt balance. This way you have the chance to increase your credit score and be free of interest accumulating.

Mortgage – If you have a mortgage loan every extra payment you make reduces the length of your loan and the amount you pay in interest. Every extra payment will allow you to pay more in principal and less in interest in the long run.

Auto – If you have a car loan, this is a great opportunity to make an extra payment. If you are planning on selling your car, then use your refund or part of your refund to get your car detailed. Getting your car detailed can make a huge difference when you’re putting your car up for sale. You can also use the money to service your car properly. Many just put off servicing their car so this is a good time to get that oil change you’ve been putting off, check your tires and get that long awaiting tune-up. A well maintained vehicle with properly inflated tires burns less gas and saves you money in the long run.

You – Hopefully your tax refund is enough to cover one of the above and give yourself a little treatment but remember there’s always a balance. They key is to take care of your responsibilities first and then enjoy your money. If you and your family have been stressed because of daily life chores and haven’t had the time or money to enjoy a nice family meal at a restaurant then now is a good time for that. Buy tickets to a show or enjoy a day at the spa with your child. Buy yourself that one good suit you’ve always needed.

Like it or not taxation affects us all to one extent or another and the mechanics of paying one’s tax is not something that can be ignored or left to chance.

Most of us in the UK pay tax on our earnings to Her Majesty’s Revenue & Customs (formerly The Inland Revenue), although the way that we pay can vary depending on the way that we earn; for pensioners or employed people tax is deducted by employers or pension providers using the PAYE system; self-employed people have to make allowance for the tax that will be due and pay HMRC independently.

Whether an employer, pension provider, employee or pensioner, PAYE calculations are of great importance and any deductions that have to be made at the end of the tax year need to be checked and double-checked; for employers and pension providers advice from an accountant is usually necessary, but it is also important that employees and pensioners do not rely totally on their employers or pension providers to get things right, it is essential not to assume that they can’t ever make mistakes, underpayments and overpayments of PAYE can and do happen.

When mistakes happen it is often due to an incorrect tax code, it is a good idea therefore to check that yours is correct each year. The news media has in the past been filled with stories of HMRC tax code errors that have seen thousands of people receive large bills having underpaid on their tax, but overpayments happen too, although they less often make the news. Take advice from a professional to ensure that your current tax code is still applicable to your circumstances and that it seems to make sense in the context of your employment status. Mistakes may still happen, but it will certainly help to reduce their liklihood.

When self-employed the onus is on you to pay the correct amount of tax on time. It is of course a good idea to take advice and there is nothing wrong with having an accountant or advisor make the calculations for you, however, it is best to also calculate the amount yourself independently, so that you can compare the two sums before submission, this type of check helps to highlight any errors and also allows you to retain control over something that is ultimately your responsibility.

With the Marcellus Shale leasing arrangements and royalties in Western Pennsylvania some lucky area land owners are now faced with important decisions involving large sums of money in a scale they have never encountered before. As exciting as this is, as with all sudden accumulations of wealth there are important accounting challenges that must be met, especially if one wants to minimize taxes.

Lump Sum or Annuity?

When the energy companies’ representatives working in Pittsburgh and Western Pennsylvania first contact landowners with potential drilling sites, they tend to entice them with up-front payments. From a tax standpoint, that represents an accounting challenges because many of the new Lessees have no experience with the limited ways in which lump sums of cash can be sheltered from onerous taxes.

That may be why so may savvy landowners, their attorneys, and their accountants prefer longer term royalties offering the largest share of the earnings they will realize over the life-time of the wells.

In some ways, this is similar to the decisions facing Pennsylvania lottery winners who are presented with a choice between a lump sum or an annuity. As attractive as the lump sum is on first look, its exposure to immutable tax issues in the year of issue begin to pale compared to the more elastic choices that come with measured, long-term royalties.

The landowner should be realizing a signing bonus and royalties in any agreement. We are, of course, looking at the entirety of the enterprise. And in that long-term comes a myriad of tax and accounting issues that Lessees need to address. In many ways these issues are identical to individuals and enterprises that have guaranteed income sources that are immutable.

More than just the needs of quality accounting that are brought to bear on regular enterprises, these consistent source of funds can and are viewed by tax code writers with special interest. For CPA’s working with Marcellus Shale lessee clients knowing inside and out the individual tax issues in Allegheny, Washington, Fayette and Indiana counties, along with the tax code of the Commonwealth of Pennsylvania, and of course, Federal Tax Law is vital.

Important Questions

Landowners need to order their financial affairs with some basic, common sense accounting guidelines:

If there is one thing that a lot of people hate doing is paying their taxes to the government. If this thing were voluntary, then very few people indeed would ever pay their taxes to the government. For this reason, a good number of people do not really see the importance of taxation, but they just see the government as this institution that is bent on sucking from them every single drop of blood until they drop dead. In this article, we are going to look at the purposes of taxation, so that you yourself can be better informed on the role that you are playing by paying your monies to the government.

Source Of Government Revenue

The first reason why societies have taxes is simply because of the fact that the government needs money for it to stay afloat. And although there are a number of governments in the world which heavily rely on other sources of income such as investments in corporations and so on, the revenue from taxation is one of the most reliable, and it is the one that most governments use for their expenses. From this money, they are able to build, roads, schools, employ officials and so on.

Redistribution Of Resources

The other reason why governments levy taxes on the citizens is because these government want to use the taxes for the purpose of redistribution of resources. As most people already know, one of the most important principles of taxation is the principle of equity. In this sense, you will find that the government can get money from the rich and then use it to pay the poor some unemployment benefits.

Economic Policies

Lastly, the government can also come up with very good policies by simply playing about with the taxation system. If the government wants to reduce the aggregate demand in the economy, it can do so by ensuring that they tax the people very much to avoid inflation. On the other hand, if at all the government wants to ensure that there is increased aggregate demand, they can do so by reducing the amount of direct taxes so that the taxpayers can have the opportunity of spending their cash on commodities.

It is important to note that the purposes that have been mentioned here are not juts stand-alone policies. At the end of the day, they different purposes will be able to interact with each other.

As a self employed person you will be responsible for your own tax payments and also for the calculation of the amount you will need to pay. There are numerous deductions, allowances and reliefs provided by Her Majesty’s Revenue and Customs that can be used to reduce your overall tax bill. So being aware of what they are could keep more of your money in your pocket.

All business expenditure can of course be deducted but personal expenditure cannot; it is usually a wise idea to consult an accountancy professional in order to check that you are labelling expenditure correctly and not inadvertently claiming that a private expense was for work or visa versa that you are missing an important tax deductable business expense.

As well as the most common tax deductable expenses there are some that often get missed, new businesses for example may not be aware that pre-trading expenditure can be counted as if it were incurred on or after the date that the business starts trading. So that any allowable expenses which you have incurred prior to the commencement of your business whilst setting up shop so to speak become tax deductable as if they happened while trading.

There are often important one-off expenses that may also be over looked, if, for instance you have spent out to improve, replace or obtain an asset to use solely for your business HMRC may provide certain relief against this.

It is not often mentioned that bad debts can be used to reduce your tax liability. When you are certain that a particular customer will not be paying, any balance relating to said customer can be written off against your turnover. You do need to be in no doubt that you won’t receive payment in future accounting periods, but this type of bad debt write-off can apply in situations when for instance a debtor has gone out of business or absconded.

Finally, if you are a member of a society, association, institute or professional body relevant to your business it is possible to take any subscriptions you may pay in to account when calculating your tax deductions.

Do take professional advice from your accountant but never be afraid to mention these deductibles if you feel that they are applicable and have been missed, after all when the end result is a lower tax bill at the end of the year it is worth checking that nothing is left to chance.