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 day to submit. No matter what type of person you are, having some valuable tips to get you on the right foot for tax season didn’t hurt anybody.
Frequently Asked Questions
Where do you file your taxes?
If you choose to paper-file your return, the address for sending this will depend on where you live and the Canadian Revenue Agency (CRA) will send you mailing labels in your tax package each year. You can also visit their website if you don’t receive one here.
What are the important dates?
Your tax return is due on April 30th each year, or if you (or your spouse) ran a business in the year, June 15. However, if you owe taxes, you’ll need to submit your payment on April 30th as well to avoid penalties.
What happens if I file late?
If you wait and file late and you owe taxes, you’ll be charged a penalty of 5% of your balance owing. You’ll also face a penalty of 1% of the balance owing for each month your return is outstanding. Plus, there will be interest added! So don’t be late or you can wind up in more of a pickle.
Where can I find help on my tax return?
- CRA website
- Have an income tax question? Call 1-800-959-8281
- Wondering where your refund is? Call 1-800-959-1956
What if I need help making a payment?
Payment arrangements are possible with the CRA but make sure to call them right away. However, if you’d like to pay more upfront to avoid the penalties, you can also look at online loans from GoDay as an option.
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 and 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? You 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 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 this year. You should’ve gotten it by February 17!
- 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 max 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! And 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 to be organized. This is something that you should be doing all year long so that when tax season comes you don’t feel so overwhelmed. You can do this throughout the year by organizing any receipts, etc. by month versus throwing them all into one folder or box and dealing with them at tax time.
Provided tax season is here, there is a good chance it may be too late to think about organization, so it’s time to get organized now instead. 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 (should come from any employer)
- T5 statement of investment income (should come from your bank)
- T4RSP or T4RIF is a statement of RRSP income or statement from an RRIF (if you withdrew any funds from here)
- 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, but making that distinction sharp and understanding what you can and cannot claim can make your life a whole lot easier. Be prepared that since the lines are blurred, you may need to prove some things to the Canadian Revenue Agency, so you should ensure 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 need to 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 those 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 tax burden with other family members. For seniors, for example, who are receiving pension or Registered Retirement Income Fund (RRIF) payments, pension income between their spouse means they can cut your tax bill and the potential impact of the Old Age Security (OAS) clawback. If you are married, make sure you are filing the right way for the both of you!
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 you can claim if your child, any age, is disabled.
It’s so easy to donate to a cause and forget about it, so make sure as you give back throughout the year you are asking for a tax receipt. These contributions can have a great benefit to you when claimed. However, it differs from province to province.
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 occured 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 here, including accommodations, storage, moving trucks, etc.
- Medical expenses:
This is dependent on what your benefits are with your job, income, etc. but keep your receipts of anything paid out of pocket for medical expenses as you may be missing on the opportunity to claim these!
- Insurance benefits:
In some situations you may be able to deduct your insurance on your tax return. For example, for your car insurance you may be able to claim your auto premium if you fall under certain circumstances. (More info here)
Tax season doesn’t need to be daunting. If you are well prepared and organized throughout the year, most people can do their taxes easily on their own. Some people do have some more complicated scenarios when it comes to taxes, like owning their own business, or having a side hustle, however, there are a ton of resources out there that are willing to help. Including H&R Block who often opens offices during tax season just to help Canadian’s get their taxes filed and answer questions.
What are your biggest tips to get through tax season and come out on top?