Manage Quarterly Instalments for 2013

Avoid owing more than $2,999 at your balance due date. Here's why...

June 15 has come and gone and this means most taxpayers will have filed returns and 2012 taxes as well as their March 15 and June 15, 2013 instalment payments. It’s a costly period of time that can be mitigated next year by paying more attention to cash flow that could be increased if quarterly instalments were better managed.

For the approximately 15% of taxpayers who owe money to the government at the end of April (or June 15 in the case of unincorporated business owners), reducing the average amount they must pay (about $4,000), is the biggest concern.

A reduced cash flow is at stake at tax time and all year long in these cases. When you owe the government more than $3,000 this year or in either of the preceding two tax years, you’ll fall into a “quarterly instalment remittance” profile. That means you will be required to prepay your income taxes for the next year starting on September 15, December 15, March 15, and June 15. This can cause significant financial hardship, as you can imagine, if you just finished paying $3,000 or more on April 30 or June 15. A few tax secrets and strategies can help you increase your cash flow.

Excerpted from Essential Tax Facts: 2013 Edition. © All rights reserved.