Clock and Plant

Plan Ahead

 

Understanding Taxes

No matter how much we all hate taxes, we all have to face the fact that they cover one of the largest grounds in our expenses. In order to successfully achieve our financial goals, we should at least understand how taxes work. In the good old days, we either had to learn how they work, or pay a hefty fee to an accountant to get our taxes filed. Today, we are spoiled with the influx of over-simplified ways of filing for taxes including Intuit's TurboTax and Wealthsimple's SimpleTax. Don't get me wrong, these are exceptional products that I think should be the future of individual tax reporting; even I use it every year for its convenience and noticeable time savings. One major drawback is that it makes us prone to being lazy, as we blind ourselves with the easy 1-2-3 steps that even a 5-year old child can manage.

Let's start with why we pay for taxes in the first place. It's simple - governments need funding to operate at maximum capacity. All public services including education, healthcare and transportation are all funded through the government at various levels: federal, provincial and municipal. They are the largest non-profit organization that we have in our modern day society, and they happen to operate in similar ways as any other private organizations out there. Meaning, the taxes that are taken off our paychecks allow the government to have a revolving income throughout the year, instead of having a