Taxable Talk: 5 TIPS
Are you dreaming up ways to spend your tax refund or already stressing about the amount you may owe to CRA? Either way, it is important to get organized sooner rather than later. Here are a few simple steps you can make tax time less stressful.
1. Collect all tax information in one spot all year round
Create a file folder labeled “income tax return” or an envelope or even a specific drawer in your home office. When you get an eligible tax deduction receipt or slip you think you may be able to use as a claim, put it in this spot. You will always know where it is and you won’t risk losing an important document. Make a list of all tax slips/receipts you expect to receive this tax season such as T4’s, child care receipts and investment slips. Once received, check it off the list. Having the information in one spot makes everything easy to find and you’ll know exactly what else you need to receive before you can prepare the return.
2. Be familiar with recent tax changes that may affect your return.
You don’t need to be a CPA to understand what may or may not apply to you. Check the Canada Revenue Agency site for a list of current changes. Remember your personal circumstances may have changed in 2018 making you eligible for credits you never considered in the past. These may include business deductions, childcare or medical expenses.
3 – Seek advice from a professional.
Most people have no problem finding the time to file their own taxes and the invention of tax software programs has made it easier than ever. But there are still many people who prefer to leave the heaving lifting to a tax professional and would rather pay someone to netfile their return. Hiring a professional tax preparer might be your best tax decision if your return is complicated or if you run a business. Getting educated help increases your likelihood of a refund, reduces the amount you may owe and will greatly decrease your stress. But be aware, you will pay for that experience, especially if you require the assistance of a CPA.
If you are low income and unable to pay for the preparation of your return, the Halifax Public Library and community centers offer volunteer tax help to prepare your taxes for those that need assistance. Watch for community board listings for free tax help.
4 – File a return – no matter what.
Even if you are certain that there will no balance owing or no income refund coming, file a tax return for that year by the income tax deadline. Filing reduces the ability of CRA to make arbitrary adjustments/assessment (basically a guess) on your income and taxes owing for that tax year. The filing of the return reports earned income, which increases your future RRSP contribution room. The filing also determines your eligibility for government programs such as GST credit rebates or the Canada Child Benefit. Its never too late to file delinquent returns (2017,2016,2015 for examples). However, filing late will cause CRA to add on a late filing penalty to your assessment.
5 – If you owe, do not avoid repayment.
Avoiding debt will not make it go away. In fact, when it comes to taxes, CRA has many tools at their disposal to enforce repayments such as offsetting credits such as GST, seizing bank accounts, judgments and garnishing wages. If you do owe CRA, be proactive and make arrangements to pay off the debt in a timely fashion to avoid accumulating interest and late filing penalties. If the matter is more serious, consult a Licensed Insolvency Trustee who can educate you on your legal debt options to deal with the matter such as consumer proposal or bankruptcy.
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