Tax return filing is a time of the year when you go through all the expenses you made this year and consider the same. When you file a tax return for the first time, you can either do it all by yourself just by acquiring some knowledge and gathering some information on the same. Or else you can ask for professional help.
If this is your first time filing, the tax filing process can be a bit confusing. However, if you know a few key tips, you will benefit from them for years to come. Filing your tax return is important to avoid additional fees and to ensure you receive all the deductions available for your tax return.
1. Revised tax form
The tax return has a new format. Instead of four pages, there are eight pages now. The new form will be more suitable for people who had no idea whether the information they were looking for directly affected the tax return or a schedule. It will contain the same information as before but in a combined format.
2. Review your previous year’s tax return
Evaluating your previous years’ tax return will help you see what slips (T4, T5, T3, etc.) you need. And make sure you don’t miss any slips in the upcoming tax season. Be cautious, the Canadian Revenue Agency(CRA) will charge penalties. If you miss out on any income slips. Even the penalty gets more critical with each upcoming year this occurs.
Do remember all slips must be issued by February 28, except for T3 and T5013 slips, which need to be issued by March 31.
A tax credit can be refundable or non-refundable. A non-refundable tax credit can only lower the unpaid amount of taxes. Whereas in the case of a refundable tax credit, you will get back any amount leftover of the balance of the credit. However, with a deduction, you cannot get money back, but it will reduce your taxes.
There are many tax credits and deductions available based on individual situations. To find out what tax credits and deductions may be accessible to you, you can go to the CRA website.
4. Let your accountant know if there is any change in address, marital status, or dependents.
If there is any change in your address, marital status, or maybe you have adopted a child, let your accountant know about this. Some of these changes will give rise to the benefits and credits you will receive. Also, make sure that the payments are received without any delay.
5. Be organized
The more organized things come into your tax preparation, the more useful it can be prepared, which can save you cash in tax preparation fees.
6. Filing your tax return on time
Two vital personal tax deadlines depend on being an individual or a self-employed sole owner.
If you are an employee, you will receive a T4 form from the business where you work. In such cases, individuals have the deadline of April 30 to file their taxes.
Canadians who are self-employed sole owners must file their taxes until June 15. This deadline is also applicable to the individual’s spouse or common-law partner. However, if any payments are due, they must be paid by April 30. If the balance remains unpaid after this date, the CRA will charge interest on any amounts you owe.
7. Declaring medical expense on your taxes
You must keep good records and receipts throughout the year when it comes to claiming medical expenses on your taxes. However, you can save your time by asking your pharmacy for an annual statement. By doing this, you don’t have to save the receipts during the year.
It is suggested to keep your receipts and supporting tax documentation for at least six years. Because the Canadian Revenue Agency may ask for documents as proof of any deductions or credits you claimed. These documents can include:
● Tax Returns
● T4 Forms
● Annual Mortgage Statements
● Receipts and statements for tax returns, including donations, child care receipts, mortgage interest, medical expenses, property tax payments, etc.
9. File Your Return Correctly
If you want to submit your return through NETFILE, make sure you provide the correct details. If your personal information such as name, date of birth, or social security number does not match the information provided by the rating agency, your income tax return will be rejected. Make sure you double-check everything before submitting it. Like your name matches the one on your Social Security number.
● Another reason is to avoid penalties and interest. The penalty for missing out on information on your return is $100.
● It is better not to lie on your tax return, as you might face some outcome that will be more severe than just fines and penalties.
10. Make valid claims
Always make valid claims. Sometimes the amounts are not verifiable, such as funeral expenses, wedding expenses, loans to family members, and other similar amounts.
There are free tax software programs also available to do taxes online. Some of these software programs will give you recommendations on which tax credits and deductions you can claim. Depending on the information you have entered, you can also get the benefits and credits for which you apply.
Income tax filing can prove to be a tough procedure. It becomes necessary to remember these important tips in detail.
Alternatively, you can also seek out the assistance of tax accounting firms. If you are not feeling very confident about getting it done by yourself. To know more, you can contact us anytime at our toll-free 647-557-0716/ +1 416-479-8532.