It’s TAX SEASON and it is time to work out what to know about CRA and COVID-19 benefits. It’s time to organize your receipts and backup information put together. Instead of having everything in one shoebox, you could save your accountant, bookkeeper or tax preparer time by having these documents all set to go in a file folder. And that my friends, will save you money! Getting your tax returns ready for the Canada Revenue Agency can be fairly simple. Knowing what 2020 income tax forms is what this post is all about.
You may be waiting for your T-4, T-5 and T-6 forms (with your income statements) but most should have been mailed out by now. If not, you’ll need to contact your employer and financial institutions that hold your investments.
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, there will be no extension as there was in 2020! Is it time to panic? Not yet but it is time to get in gear and start amassing all your receipts, Ts and back-up information.
I am not an accountant or even a bookkeeper, but during tax season, I worked for 3 years at one of the top national accounting firms as a tax preparer. I helped organize the receipts into their respective categories, scanned and sent them off to the many minions that prepare your taxes.
I loved my job as there was always something new to learn. Here are a few general tax season tips about getting organized and tax prep and I thought I would pass them along. It may make your last-minute tax preparation a little bit easier.
Tax Season Tips: what you need to submit your taxes:
What’s New due to COVID-19
- If you worked from home in 2020 due to COVID-19, you may be able to claim certain employment expenses
- If you received COVID-19 emergency or recovery benefits in 2020, you must report these amounts on your income tax and benefit return
General Tips for Tax Season
- Have all your T-forms together. If there is back up for your T-3 and T-5s, include them with the tax forms.
- Keep all receipts, cancelled cheques, ticket stubs for travel and any monthly credit card statements for record-keeping purposes. However, do not send in your records or receipts with your income tax and benefit return, but keep them in case the CRA asks to see them.
- Generally, you have to keep your records (whether paper or electronic) for at least six years from the end of the tax year to which they apply.
- RRSP contributions are separate from the other T’s
- Separate your Capital Gains (if the 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 Eldercare? 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. These are two distinct types of donations.
- For medical deductions, keep all 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. - Keep a record of each motor vehicle you used for employment. This record must show both the total kilometres you drove and the kilometres you drove for employment purposes in the year.
- E-file if you can. The CRA guarantee quicker return processing, better accuracy, environmentally friendly (because it is paperless) and ease of mind because you can have a professional tax preparer 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, WealthSimple, H&R Block to name a few. There are over 20 software and mobile options on the CRA website that can help you out.
If not, you can 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 centre and other community centres. If you are on a limited income, you may be eligible to have your tax returns done for free. You can also go to a bookkeeper or tax specialist or professional accounting firms. The latter two may need more time than a week to process your returns so keep that in mind.
Let’s face it, no one likes tax season and COVID-19 has made it more challenging but being organized and submitting your taxes as soon as possible will benefit you. If you owe money, you will have to pay by April 30th. If you get a refund, you will have something to celebrate. Finding out you may be eligible for deductions or benefits (which are still available) may be the windfall you need right now.
If you do receive a tax refund be sure and save it for a future trip or how you can use it to downsize. Remember: #DreamNowTravelLater. Good luck doing your taxes and remember the sooner you do them the less you’ll have to worry about!
Please note all advice is anecdotal and not from a professional bookkeeper or accountant. As mention, I worked at one of the big 5 accounting firms for 3 years processing hundreds (probably thousands) of Canadian tax returns. Please check on the Canada Revenue website or a tax professional for the best options for you!
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 centre numbers and hours are listed on the CRA website.
Margarita Ibbott is a travel and lifestyle blogger. She blogs about travel in Canada, the United States and Europe giving practical advice through restaurant, hotel and attraction reviews. She writes for DownshiftingPRO.com and other online media outlets.
The very idea of taxes always makes me a little nauseous. COVID 19 has made things a little bit different this year, so these tips are so helpful. Like Linda, my family uses Quicken, and I find that really helps us at tax time. I also find comfort in having a professional involved because it seems that some things change every year.
I always think as entrepreneurs or solo-preneurs, we have a tendency of wanting to save money where we can. But investing in a software package that helps us do our taxes (and save time keeping track) is never a bad idea! Thanks for dropping by.
It’s always interesting to see how things are done north of the border, and while I assume all those T-forms are the equivalent of our 1099s and such, it’s intriguing to hear advice for situations up there. I also clicked through the provided link and was fascinated to learn about the specific deductibility of “extra food” for rickshaw drivers! Who knew?! May we look back someday and find that COVID and special tax considerations are just a foggy memory. Stay safe, travel well!
OMG, what link brought you to the rickshaw driver expense? We don’t really have them here in Canada so I’m curious. T-forms are the forms you need to claim income. So you’ll get one from your employer, from investments that generated earnings. Could you tell me if the 1099s is the equivalent? I will add that to the post to clarify. Thanks for dropping by Julie!
I live in the United States, but many of the organizing strategies you suggested can be applied to our tax prep. Normally annual taxes are due on April 15th, but the government extended the deadline until July 15th. I use Quicken during the year, which makes preparing our summary easy for our accountant. And all of the tax backup documents that he needs go into a file for that tax year so that I don’t have to hunt anything down at tax time. Pre-Quicken, I used to do things manually, but Quicken makes the process so much faster.
I have debated about getting an accounting app. My bookkeeper is so good at doing my taxes that I just send all the stuff and she manages to get it all done quickly and easily. That being said, there is a huge benefit in seeing where the money goes. I have made a spreadsheet that I am filling out on a regular basis and it’s working for now. Check with me in December 🙂