The little details can have a big impact when you're preparing your tax return. Here's a list of common mistakes that are easy to avoid.
#1 Forgetting to report income
One of the most common mistakes is failing to declare all of your income, whether it's from part-time work, rental property, or investments.
To avoid this pitfall, create a list of all your income for the year. Consider T4 slips and investment statements, but don't forget about income that comes without a slip, like online sales of personal items or side jobs.
Tips for tracking all your income
Use personal finance apps or keep a simple accounting journal throughout the year. This way, you can effortlessly gather all your income when tax time comes around.
#2 Overlooking tax deductions
Did you know that many Canadians don't take advantage of all the credits and deductions they're entitled to? This means potentially hundreds, or even thousands, of dollars lost.
Take the time to assess which tax credits you are eligible for, such as charitable donations, medical expenses, or childcare expense credits. Pay special attention to the tax changes of the year.
Strategies to increase tax deductions
Document and keep receipts throughout the year. Explore regional tax incentives or credits for specific activities like energy-efficient home renovations.
#3 Calculation Errors
Miscalculations in your return could lead to a more thorough review by the Canada Revenue Agency, cause delays in receiving your refund, or, in some cases, increase the amount of tax due.
Choose the right tax software to avoid errors
Tax filing software can automate calculations and reduce the risk of errors. Make sure to choose a reliable and recognized tool to guide you through the process.
#4 Missing the Deadline
Nothing disrupts personal finances more than an unexpected penalty for missing the tax filing deadline.
Be aware that the Canada Revenue Agency imposes penalties and interest on amounts owed if the return is filed after the deadline.
Tips for never missing a tax deadline
Mark the deadline in your calendar and set a reminder several weeks in advance to start your tax return. If you're waiting for documents, reach out to the issuers well in advance.
#5 Outdated Information
Changes in your personal life can have significant implications on your taxes. Failing to update your information can lead to costly mistakes.
Always update your tax return in case of marriage, divorce, the birth of a child, or a move. These are key elements that impact your taxes.
The Impact of Personal Changes on Taxation
Understands how these changes affect your taxes. For instance, the status of a common-law partner can grant you additional credits, while divorce requires a reallocation of credits.
#6 Not Keeping Your Supporting Documents
Keeping complete records is essential for any claims and to prepare for any audits.
Retain all income slips, receipts, investment booklets, and more, for at least six years. This is the period during which the CRA may request to see your supporting documents.
Create a filing system that allows you to easily retrieve any required document. Use either physical binders or recognized online storage solutions for quick and secure access to your documents.
[fs-toc-omit]Consult a CPA or Accounting Technician
Avoid the pitfalls of tax filing by entrusting your finances to professionals. CPAs and accounting technicians are perfect allies for optimizing your tax return. Contact one now for guaranteed peace of mind. It's your first step towards a worry-free tax filing!
FAQ: Serafin explains tax filing
Do you have questions about your tax return? Serafin, your smart financial assistant, is here to help.
In this section, find clear and concise answers to the most common tax questions, formulated by Serafin to guide you through your hassle-free tax filing.
What is the deadline for submitting my tax return?
The deadline to submit your tax return in Canada, including Quebec, varies depending on your situation. Here are the main deadlines:
- For most individuals: the deadline is April 30.
- If you or your spouse are self-employed: the deadline to submit your return is June 15. However, any tax owed must still be paid by April 30 at the latest to avoid interest.
It's important to note that if the deadline falls on a weekend or a public holiday, the Canada Revenue Agency (CRA) and Revenu Québec consider the return to be on time if it is submitted on the next business day.
What documents do I need to prepare for my tax return?
Income:
- T4, RL-1 – for employment income.
- T5, RL-3 – for interest and dividends.
- T4A, RL-2 – for pensions, annuities, retirement, and other sources of income.
- T3, RL-16 – for trust income.
- Information on self-employment or business income, if applicable.
Deductions and tax credits:
- Receipts for contributions to an RRSP.
- Receipts for childcare expenses.
- Charitable donation receipts.
- Invoices or receipts for medical expenses.
- Information on alimony payments.
- Receipts for education expenses (T2202, RL-8).
- Housing information: RL-31 for Quebec residents (if claiming the tax credit for solidarity).
This list is not exhaustive and may vary depending on your situation. Therefore, it's important to consult a specialist or check the Canada Revenue Agency (CRA) and Revenu Québec's websites for a comprehensive and personalized list based on your tax situation.
Preparing these documents in advance can greatly facilitate the income declaration process and help ensure you receive all the deductions and tax credits you're entitled to.
How can I find out if I'm eligible for certain tax credits or deductions?
To find out if you're eligible for certain tax credits or deductions, follow these simple steps:
- Visit the CRA and Revenu Québec websites for official information on available deductions and credits.
- Use the online tools provided by these agencies to assess your eligibility.
- Read the eligibility criteria for each credit or deduction to see if you qualify.
- Consult a tax professional if you have questions or to get personalized advice.
- Review your tax situation each year, as laws and your circumstances may change.
What should I do if I make a mistake on my tax return that has already been filed?
If you have made a mistake on your already submitted tax return, follow these steps to correct it:
- Wait for your Notice of Assessment to ensure your return has been processed.
- Make corrections online through “My Account” on the CRA website for federal, or “My Account for Individuals” for Quebec.
- Or submit a correction form: T1-ADJ for the CRA, TP-1.R for Revenu Québec.
- Specify the changes and attach the necessary supporting documents.
- Be aware that you have 10 years to correct.
After correcting, you may receive an additional refund or owe money.
Is it better to file my tax return online or on paper?
It is generally better to file your tax return online because it's faster and easier, and you receive your refund sooner. It's also good for the environment and allows you to keep your documents organized easily. Paper filing can be an option if you prefer it or if you don't have good internet access.
