8 tips for this tax season
January 27, 2021
Crowe MacKay LLP
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Filing your personal taxes properly is important to avoid additional fees and to ensure that you receive all of the deductions available for your tax return. Jennifer Mendes, Senior Manager at Kelowna, provides useful insight into filing your taxes. Here are 8 areas to focus on as you prepare to file your taxes:
1. Check your previous year’s tax return
By reviewing your previous years’ tax returns, you can determine which receipts (T4, T5, T3, etc.) you need to make sure you don’t miss any in the coming tax season. Note that the rating agency charges penalties for missed income statements and the penalty becomes stricter with each subsequent year.
Note that all receipts must be issued by February 28th, with the exception of receipts T3 and T5013, which must be issued by March 31st.
2. Tax Credits and Tax Deductions: What Are They and What Apply To You?
A tax credit can be non-refundable or refundable. A non-refundable tax credit can only reduce the amount of tax owed. In the case of a refundable tax credit, the remainder of the credit will be returned to you. However, one deduction may not get you any money back, but it will reduce your taxable income one dollar at a time.
Many tax credits and deductions are available depending on the situation. To find out what tax credits and deductions may be available to you, please visit the CRA website.
3. Change of address, marital status or dependents? Let your accountant know
If you have had a change in address, marital status and / or the birth or adoption of a child, please notify your accountant so that the appropriate updates can be made. Some of these changes adjust the benefits and credits you receive and ensure that payments are made promptly.
4. Prepare summaries and organize your receipts
The more organized things are in your tax advisor, the more efficiently they can be prepared, which can save you money on tax preparation fees. Use the Crowe MacKay Tax Organizer to organize your taxes as effectively and efficiently as possible.
5. The main residence exemption: what is it and how does it apply to you?
A primary residence is a residential unit and can be one of the following: house, cabin, condominium, apartment in a residential building or duplex, caravan, mobile home, or houseboat.
In general, reporting the sale of your primary residence is a non-taxable event for individuals. In most cases, however, after you sell your primary residence, the rating agency will require you to disclose basic information on your income tax and performance declaration such as the year of sale, year of purchase, home address and sales proceeds. By disclosing this information, you can seek full primary residence exemption and avoid paying taxes on profits from the sale.
6. Submit your tax return on time
There are two important personal tax deadlines that depend on whether you are an individual or a self-employed sole proprietor.
Tax deadlines for individuals
Canadians who work for an employer receive a T4 form from the company they work for. In these cases, individuals have until April 30th to file their taxes.
Tax period for self-employed sole proprietorships
Canadians who are self-employed sole proprietorships have until June 15 to file their taxes. This period also applies to the spouse or partner of the individual. However, all payments due must be paid by April 30th. If the remaining amount is not paid after this date, the rating agency will charge interest on amounts owed.
7. Eligibility for medical expenses for your taxes
When it comes to claiming medical expenses for your taxes, keep good records and receipts year round. A time-saving tip, however, is to ask your pharmacy or chiropractor for an annual bill. This way you don’t have to save the receipts throughout the year. For more information on what is eligible, please see the credit rating agency’s eligible medical expenses, which you can claim on your tax return.
8. How long do I need to keep my tax receipts and receipts?
It is recommended that you keep your receipts and tax documents for at least 6 years. This is because the credit rating agency may request documents to prove any deductions or credits you have claimed. Documents can contain:
- Annual mortgage statements
- Receipts and returns for tax returns, including donations, RRSP contributions, receipts for childcare, mortgage interest, medical expenses, property tax payments, child support / child support payments, etc.
The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.
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