by Author Name Withheld 67

Created on: March 20, 2007   Last Updated: May 08, 2007

1. Your objective in learning about tax is to maximize the amount of cash in your hands.

2. Cash to you comes from your revenues less your expenses, i.e. your net income, less the tax you pay.

3. Typically no matter what country you live in, you will pay some kind of income tax. It will usually be based on your taxable income.

4. You may also pay other kinds of tax: VAT (Value-Added Tax), GST (Goods & Services Tax), PST (Provincial Sales Tax), and so on.

Income Tax Tips

5. Never let the fear of paying tax stop you from earning revenue.

6. Find out, as soon as you can, which of your expenses the income tax authorities will allow you to deduct from your revenues when you calculate your net income (which we will assume is the basis for your taxable income). You can get this information from several sources: your local tax office, your accountant, writers' seminars (many writing groups invite a tax professional in), the internet - but only rely on information from the government and highly regarded experts.

7. Set up a spreadsheet or a manual system where you keep track of all of the money you spend, organized into the categories that you are allowed to deduct. If you organize your records to mirror the lines on the income tax form, you save a lot of headaches.

8. KEEP YOUR RECEIPTS. Make a note right on the receipt if it is not 100 percent obvious what the receipt is for and what category of deduction it fits into.

9. Organize the way you do business so that you are eligible for all the deductions you can use. For example, in some places, you can deduct the expenses of running a home office, but only if the home office is devoted to the single use of being a home office, not if it doubles as a rec room or something else.

10. Sometimes travel expenses are deductible only if you have a firm assignment in hand (in writing) before the trip. Be sure you know the rules for your country / state / province.

11. Don't fall into the trap of spending money because you can "write it off". Spend the money if you have to, but only if it's to buy something you really need. The objective is to have the maximum amount of cash in your hand, not to have the biggest set of deductions on your block.

12. Get a blank income tax form and go through it line by line sometime. Take your time. Read the information guides the government provides. Highlight absolutely everything that might apply to you. Then confer with your accountant and come up with a strategy. For example, maybe it's better for you

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