It’s Tax Season, are you ready?
As the days are getting longer and we look forward to the spring equinox, it’s a sure sign that a new season is upon us. No, it does not mean spring – it’s tax season. Are you ready?
Many people dread this time of year, but it doesn’t have to be a chore. Here’s a few helpful hints that will make things easier, whether you file your own taxes or use a professional.
Most tax slips have to be issued by the end of February, including T4 slips for employment income as well as Old Age Security and Canada Pension Plan Slips. It is a good idea to gather all of these income slips in a folder or envelope so they can all be kept in one place.
Organize your receipts into categories such as income, deductions and credits. Examples of deductions include your Registered Retirement Savings Plans (RRSP) and Child Care receipts. Children’s fitness activities and Charitable donation receipts are considered tax credits.
Medical expenses are also eligible for a tax credit and can be efficiently organized. If you have prescription drugs, ask your pharmacy for a printout of your yearly costs. Keep a log of any medical appointments that you had to travel to when the service is not available where you live. If you are required to travel more than 40 kilometers (one-way) for your appointment, the Manitoba rate for mileage is 52 cents per kilometer for the return trip in lieu of actual fuel costs. Also, if you have to travel over 80 kilometers one way, you can claim meals at $23 per meal instead of the actual meal receipts. Ensure that you have a confirmation of your appointments as supporting documentation in order to claim these amounts.
Ensure that you have everything before you file
Now that you are organized, be sure that you have everything you need before you go ahead and file your return. A good double check is to compare everything that you had on last year’s tax return to your current year information. Be careful, as certain things such as T3 slips and RRSP slips can come in in late March. It is always easier to file everything correctly the first time, than to have to make adjustments later.
Keep your receipts
Just because your taxes are filed and you receive a Notice of Assessment from Canada Revenue Agency (CRA) doesn’t mean that you can get rid of your tax documents. CRA has a review process where they randomly verify the information claimed on your tax return. In fact, you are required to retain your information for a total of seven years (six previous years plus the current year). As much as it might be a burden to have to do this, you are always better safe than sorry.
Keep up to date
Tax laws are constantly changing, so is important to keep up to date. The Canada Revenue Agency website https://www.canada.ca/en/revenue-agency is a good resource. If you find staying in the loop difficult, then it is recommended to use an accountant or tax professional. It is their job to stay on top of all the changes to the Income Tax Act. They can also assist you with questions that you might have and look for ways to best minimize the amount of tax that you pay.
Now you have four ways to help reduce the stress of filing your tax return. Soon spring will turn to summer and we can all enjoy the warmer weather.