It’s Canadian’s least favourite season – tax season! Yes, winter is ending, but with it comes the good and the bad – warmer days and filing your taxes. While a lot of folks end up with a refund, I don’t think there’s many out there who truly enjoy doing their taxes. Here are someideas to help you trim your tax bill. If you’ve already submitted your taxes, keep these in mind for next year!
- Balance your investment income. If something is going to be highly taxed, it’s best to hold it in your RRSP (or TFSA!)
- Ontario and B.C now offer credits to taxpayers who are 65 are older and make renovations to make their homes more mobile. The credit may also be claimed by qualifying relatives of any age who live with a senior.
- Transfer dividend income to the lower earning spouse
- Claim the family caregiver amount – you can claim this if you’re a caregiver of a dependant with a mental or physical infirmity
- Carry forward student tax credits or transfer them to a spouse or parent
- Disability tax credit – this has recently been expanded, and some/all of the following may be recognized: ADD, ADHD, autism, Asperger’s Syndrome, bipolar disorder, manic depression, anxiety disorders, irritable bowel syndrome, Type 1/2 diabetes, epilepsy and learning disabilities.
- Splitting your pension
- Deducting kid’s costs – anything from daycare to camp to music lessons!
What’s your favourite deduction? I can get money back for unreimbursed medical expenses and for my public transit use.
It’s tax time again – and while the Canadian Revenue Agency (CRA) doesn’t strike fear in the hearts of Canadians the way the IRS does us neighbours to the south, it’s still a good idea to always file your taxes. Here are some good reasons why:
- Often, the government ends up owing you money. The government is always happy to take your money – so you should always try to get as much back (legally!) as you can!
- By filing, you can create RRSP contribution room, and get access to federal and provincial tax credits
- If you are late in filing your taxes, but do so before the CRA orders you to do so, you are more likely to avoid nasty things like gross negligence penaltiesw and possible tax evasion penalties
- As well – if you haven’t files for years and you owe taxes – interest accrues on both your outstanding taxes and the penalties for not filing your taxes.
- The consequences could end up being anything from filing for bankruptcy to house arrest or jail time (remember – that’s how they got Al Capone).
So – it’s no fun, but you might as well bite the bullet and file your taxes. I tend to wait to late in March to make sure I have all my receipts – and I start an envelope they all go in as soon as the first tax slip arrives. Make sure you keep track of things such as the following so you can get as much back as possible:
- RRSP contributions
- Medical expenses not reimbursed
- Commuting costs (may or may not be covered depending on your commute)
- Charitable donations
And always keep all your slips – even if you e-file! I keep everything for 7 years, just to be on the safe side.
Happy tax time!
Have you ever not filed? Why not, and were they any consequences?
Well, I’ve just finished my first round of going through my taxes. I make sure to start collecting my information in a very formal system (an envelope) once it starts coming in, so I’m usually pretty good about having my receipts all together. I finally went out an bought a copy of UFile (yes, I know filing online may be cheaper, but I like having everything on my computer), and sat down to get started this afternoon.
My brain hurts. Mr. Canuck Buck’s taxes are *so* easy, but even then, I forgot to get his public transit receipt information ahead of time. Mine are a bit more complicated (just more RRSP slips and charitable donation receipts), but generally aren’t too bad.
We had some medical expenses we incurred in 2010, but didn’t claim. Which is okay – because you can claim medical expenses ending for a 12-month period, as long as it ends in 2011. So I just went ahead and put the actual date of the expenses in. However, when I went ahead and checked how our refunds are calculated, the expenses aren’t listed there. I can’t find anything online (either from UFile or the government) that says which date to use.
So I’ve now contacted UFile and hope they answer quickly. This is far too much money not to get the credit for. And since I’m “middle class” and have no kids, I don’t get much in the way of credits!
I guess the moral of the story here is – always double-check the math, regardless of who is doing it. I’ll be going through all my numbers again next weekend with Mr. Canuck Buck to make sure that I’ve put everything in and haven’t missed anything.
Happy tax season – and may the odds be ever in your favour (any Hunger Games fans out there?)