It’s TAX SEASON! This 4M task may not take you a few minutes but if you organize your receipts and backup information, you could save your accountant, bookkeeper or tax preparer time. And that my friends, will save you money! Since we are officially halfway through the month of April, it’s time to get your taxes information together. If you have already done this and submitted your tax return – BRAVO – however if you are like most Canadians – and I’m going to take a wild guess at this and say maybe 50% of you – Time is running out! Is it time to panic? Not yet but it is time to get in gear and start amassing all of your receipts, Ts and back-up information. I am not an accountant or even a bookkeeper but there are a few things that I know about getting organized and tax prep and I thought I would pass them along to make the last minute preparation a little bit easier.
Tax Season Tips: what you need to submit your taxes:
- T-forms (state your income from salary, pension, return on investments and dividends)
- RRSP contributions (but not TFSA – Tax Free Savings Account)
- Capital Gains or Losses (new: reporting the sale of a principal residence)
- Charitable Donation (only registered charities are eligible for deductions)
- Political Donations (these are in a separate category from regular donations – Federal and Provincial)
- Medical (prescriptions, doctor and dental costs and equipment that will aid you)
- Tuition (if you children are in post-secondary not for a private elementary or high school)
- Rent if you are a student in post-secondary)
- Public Transportation pass (also if you are a student in post-secondary)
- Children’s Fitness Credit (Maximum is $500/child – note: this is the last year to claim it)
- Children’s Art Credit (Maximum is $250/child – Note: this is the last year to claim it)
- Childcare (before/after and during breaks (Christmas and March Break, summer camps)
- Family Tax cut – has been eliminated for 2016 and later years
- TFSA (tax free savings account) has been reduced to $5,500
Those are the main items that you need to work about as a family in Canada. There are a few other items that may be of interest to you and I have made a PDF of what is new in 2016 taken directly from the CRA website (link both here and in the PDF). The PDF also contains the links provided by the Canada Revenue Agency to the appropriate page for further explanation. Those are the technical items that you need to know. I have a few practical suggestions to keep your items organized and ready for the tax preparer.
- Have all your T-forms together. If there is back up for your T-3 and T-5s, include them with those forms.
- RRSP contributions are separate from the other T’s
- Separate your Capital Gains (if information is provided by your broker – they should – because they are legally required to provide these forms)
- Figure out who is going to take the deduction: a parent if the dependent is in post-secondary or the dependent because they made a sizable income and need the deduction? Pension splitting? Child Benefit? or Elder care? Figure those things out if you file taxes with your spouse or common-law.
- Tear-off the donation receipt. No need to give the tax preparer extra paper. Be sure to separate political donations from charitable donations and donations in-kind
- For medical deductions, keep al prescription receipts together. Remove the cashier receipt that is stapled to the billing and place it further down on the invoice (don’t cover the name of the Dr. or of the person receiving the services). Make sure the deducted amount is clearly stated.
- Group and Itemize all Business Expenses on a separate spreadsheet (you can only claim certain expenses so be clear on what you can deduct). CHECK HERE if you don’t know for sure. If you are only preparing the spreadsheet, know that you are responsible for supplying the original receipt if asked by the CRA to provide proof.
- E-file if you can. The CRA guarantee quicker return processing, better accuracy (because the program performs tests before you submit), environmentally friendly (because it is paperless) and ease of mind because you can have a professional tax prepare file for you. To be truthful, It is easier, quicker and hassle free.
Who should do your taxes?
That is a personal choice. There are plenty of tax software programs both on-line and that you can use on your laptop that can help you with tax preparation. The most popular are Turbo Tax, TaxTron, H&R Block to name a few. There is a whole list on the CRA website that can help you out. If not, you can certain make an appointment and see someone at those pop-up H&R block kiosks. You can find them in grocery stores (yes, my local Loblaw has one), shopping center and other community centers. If you are on a limited income, you may be eligible to have your tax returns done for free. You can also go to bookkeeper or tax specialist or professional accounting firms. The latter two may need more time than a week to process your returns to keep that in mind.
Let’s face it, no one likes to do their returns but there are you can ease the pain by being organized and submitting your taxes as soon as possible. If you owe money, you will have to pay by April 30th (or May 1st this year because the 30th is a Sunday). If you get a refund, you will have something to celebrate. However, as I heard on CBC TV yesterday, pay off you debt with our return if you have anything outstanding or you could contribute to either your TFSA or your RRSP. Don’t wait until next year to put that money aside. Do it now for that rainy day.
Good luck doing your taxes and remember the sooner you do them the less you’ll have to worry about!
If you have any problems, there is a helpline that you can call. Depending on where you live you have a designated call centre to help you. The list of call center numbers and hours are listed on the CRA website.
Don’t know where to send your paper tax return? You will also need to verify which CRA office serves you.