Getting ready for tax season takes a surprising amount of work. The best way to prepare is to start planning early before tax season hits. What is the best way to organize yourself at tax time? Follow our helpful tips below.
Remember deadlines – RRSP contribution deadline is usually the last day in February. RRSP contributions will lower your taxable income for the year the contribution is made, or for payments made in the first 60 days of the following year can be applied to the previous year. The Canadian tax return deadline is April 30 for most employed Canadians. If you are self-employed the actual date to file your taxes is bumped to June 30 but if taxes are owed, the deadline to pay the taxes is still April 30.
Get organized – Get all those little slips and receipts together and put them in one place. A manila envelope or shoebox or even Ziploc baggies; anywhere where you won’t lose your slips. Make a checklist for yourself of your sources of income for the calendar year, for example, all the places you worked, any investment income you have, self-employment income etc. Make sure you haven’t missed any sources of income in the year and make a list of expenses that are or can be used for deductions. If you are unsure, seek advice from a professional tax advisor.
Get a copy of your previously filed tax returns and your previous year notice of assessment which will outline any changes that Revenue Canada made to your tax returns filed in the previous year. This information will be very helpful in filing your current year’s return. If you don’t have a copy of the previous year tax return or notice of assessment, these can be requested from the CRA. Your manila folder can also be used ahead of time so that the current year’s tax return deductions and income can be included and put in one general spot throughout the year saving you time and effort at tax time when you are ready to file. This helps to ensure that you don’t miss anything throughout the year especially those deductions that could reduce your taxable income.
There are many free services that are online and available for direct filling with the CRA and the services are great if your personal tax return is simple. For a more complicated returns, there are Basic software programs that are available for a modest price that can help you file your own tax returns. However for the more complicated returns or detailed investment income it may be money well spent to seek out the advice of a tax expert or an income tax provider that files returns regularly, to assist you with areas of tax advice that may be complicated. Some of the areas that will generally attract a Revenue Canada review each year include moving expenses, medical expenses claimed, large advertising or marketing expenses if you’re self-employed.