Tax season is here and we’re either busy getting all our ducks in a row, or we’re putting it off to the very last possible moment. No matter what type of person you are, these valuable tips to get you on the right track during tax season certainly can’t hurt.
Frequently Asked Questions
Where do you file your taxes?
If you choose to paper-file your return, the address you send it to depends on where you live. The Canadian Revenue Agency (CRA) sends you mailing labels in your tax package each year. You can also visit their website here if you don’t receive your forms.
What are the important dates?
Your tax return is due on April 30th each year. However, if you (or your spouse) ran a business in the year, you have until June 15th to file. Please note, you’ll need to submit your payment on April 30th if you owe the government taxes. Otherwise, you’ll be penalized.
What happens if I file my return late?
If you file your return late and you owe taxes, you’ll be charged a 5% penalty on your balance owing. You’ll also face a penalty of 1% on the balance owing for each month your return remains outstanding. Plus, the government will tack on interest. Obviously, it is best to file on time or you’ll end up owing much more.
Where can I find help with my tax return?
Have an income tax question? Call 1-800-959-8281
Wondering where your refund is? Call 1-800-959-1956
What if I need to make payments?
Payment arrangements are possible with the CRA, but call them straightaway. If you’d like to deal with the balance yourself and avoid penalties, you can also look into online loans from GoDay.
What’s New for 2020 Tax Filing
Just like everything, things change when it comes to the CRA and filing your taxes. For 2020, there have been some updates implemented for this upcoming tax season. It’s important to be mindful of these changes to not only get the most of your return, but also the support you need.
- Charlie the Chatbot! Have a question and you need a quick answer? This new chatbot will help you find the info you need to file your taxes.
- Updates to processing times. Want to know how long it’ll take for the CRA to handle your request? Use the Processing TImes Tool to find out.
- Easier payment options. The CRA have updated their payment options to make it easier. Using the new “Proceed to Pay” buttons conveniently located in “My Account”, you’ll be able to choose the payment method that works best for you.
- Tax packages. Like to file on paper? If you filed on paper last year, the CRA will mail you your package to do so again this year. You should receive it by February 17. If not, you can request one on their website.
- Wait times. Calling the CRA can be a nightmare, and that’s why they have now introduced telephone wait times so you’ll know just how long you’ll have to wait to speak to someone.
Changes for individuals and families:
- Withdrawals have increased under the Home Buyers’ Plan. The maximum amount you can withdraw from your RRSP increased from $25K to $35K for withdrawals made after March 19, 2019.
- Cannabis as a medical expense. Yep, weed is legal now! Certain cannabis products bought for a patient for medical purposes can be eligible for the medical expense tax credit.
- Tuition and enrolment certificate. The new T2202, Tuition and Enrollment Certificate replaces T2202A for the 2019 and following tax years.
One of the biggest ways to eliminate mistakes on your taxes is through organization. This is something that you should do all year long, so when tax season comes you won’t feel overwhelmed. For instance, organize your receipts by the month instead of throwing them all into one pile that you must sort through later.
If tax season is already here, you’ll need to organize now. Start by pulling everything together, reviewing your forms, and double checking there isn’t anything you could be claiming that you’re missing. Here is a great list of some of those items that you may have forgotten about.
What info will you need to get started? Here’s a checklist (note that these won’t all apply to everyone):
- Your SIN card or number
- T4 employment slip from anywhere you worked in the tax year (comes from your employers)
- T5 statement of investment income (comes from bank or investment firm)
- T4RSP or T4RIF is a statement of RRSP income or statement from an RRIF (if you withdrew any funds from your RRSP or RRIF)
- T4A statement of pension, retirement authority, and other income
- NR4 statement which shows the amounts paid or credited to non-residents of Canada, for example, if you were an expat
- T5013 statement of partnership income (if you have investment income from partnerships)
- T3 statement of trust income allocations and designations (if you have investment income from mutual funds or from certain trusts)
Document meals and travel expenses
There can be a blurred line between personal and business expenses. However, you need to understand what you can claim and make a sharp distinction between the two. Canada Revenue Agency may audit your return and ask for proof. Consequently, it is very important that your bookkeeping is up-to-date, and organized.
Save in tax-friendly accounts
When you have extra money to invest, make sure you are doing it in a way where you’ll pay the least amount of tax possible. For example, you’ll want to contribute money to your RRSP since you get a tax deduction on your contributions. You can also set up a TFSA as you’ll also pay no tax on investment earnings and all withdrawals are tax-free.
Income split for family tax savings
There are some ways you can share your tax burden with other family members. For example, seniors who receive a pension or Registered Retirement Income Fund (RRIF) payments, can split the income with their spouse. This can reduce the person earning the highest amount lower their tax bill. It can also potentially help them avoid Old Age Security (OAS) clawback. If you are married, tax filings should be about what offers the most benefit for you as a couple.
Did you pay someone else to look after your little ones? The government lets you deduct up to $8K per child for children under 7, and $5K per child for those ages 7-16. There is also additional amount you can claim if your child, any age, is disabled.
It’s so easy to donate to a cause and forget about it. As you give throughout the year, ask for a tax receipt. These contributions can have a great benefit to you when you file your return.
Other things you may be missing on your tax return:
- Student loan interest:
If you are paying back your loan, you can claim any interest you have incurred on your loan.
- Home buyers perks:
If you were a first-time home buyer in the tax year, you are likely eligible for $5K, regardless of how much you spent.
- Moving expenses:
Did you move 40km or more for work or school? There is a long list of things you’ll be able to claim including accommodation, storage, moving trucks, etc.
- Medical expenses:
Out-of-pocket medical expenses could lower your income and your tax payable. Keep your receipts – these costs can add up quickly.
- Insurance benefits:
In some situations you may be able to deduct your insurance on your tax return. For example, you may be able to claim your auto premium under certain circumstances. (More info here)
Tax season doesn’t need to be daunting. If you are well-prepared and organized throughout the year, you can probably do your taxes yourself. Some people do have more complicated returns, such as owning a business or earning through a side hustle. However, there are a ton of resources out there that can help.
What are your biggest tips to get through tax season and come out on top?