While few people want to dwell on taxes, it does no good to do a rush job, either. According to Mawer Investment Management, people should really get started early with tax preparation for a number of reasons. First, it is important to not overlook claims that could lower your taxes. Second, tracking down receipts and slips could take time. Third, if you owe money from taxes and miss the deadline, you will be charged compound daily interest on the balance, in addition to a 5% late-filing penalty.
Here are ways to streamline tax preparation to meet the filing deadline without abundant stress: Reference last year’s tax return Start with reviewing 2020 tax paperwork, including the return, slips, receipts and notice of assessment. This part of the process will help you remember what you will need to file this year’s return. From there, create a list. Take note of any personal changes One of the constants of life is change, so be sure to address any things that have altered from the previous year, including marital status, legal name, address, etc. It is also important to note a change in circumstances, like having a baby, starting a business or new job, moving, buying or selling a house, retiring, acquiring foreign property worth more than $100,000, or any new investment accounts. These changes could require receipts and new slips like the T4E or T4A. Add these changes to your list and make sure to notify your tax preparer. Look for new or hidden credits or deductions There is a chance there were previously overlooked deductions and credits that could have been claimed. Things like medical expenses, professional or union dues and political as well as charitable donations can be deducted. Check out “10 Things You’re Forgetting to Claim on Your Taxes” for a list of things that might be missed. Also, check the CRA’s website, especially as it pertains to changes due to the COVID-19 pandemic. Find missing documents Paper or digital copies of deducted items are needed for your files, especially since the CRA can request you provide them, and can deny a claim if you do not. It is also important to keep those documents for seven years, just in case there is an audit. CRA’s My Account online is a good place to start, since there might be some digital copies of slips that can be downloaded. Employers and issuers must be followed-up with individually, otherwise. Strategic thinking is essential to preparation “Unused portions of some non-refundable tax credits can be transferred to a spouse (or parent, as is the case with the tuition amount), including the disability amount, age amount, and pension income amount, so be sure to see if any of these apply to you,” according to Mawer. Further, splitting pension income with a spouse might be able to place you in a lower tax bracket and lower your tax bill. Utilise online software Online software for tax filing can link directly to your CRA account, where you can view previous tax information. It is helpful and time-saving that these programs can auto-populate parts of tax documents by referring back to last year’s information, like basic information. The software is also helpful in that it will let you know about common deductions that should not be missed. If your taxes weigh-in on the less complicated side, then the entire process could take around 20 minutes to complete. Additionally, looking at MyCRA will also be helpful for tracking important information. Even if certain of a tax refund, what good does it do to wait? Afterall, “the sooner you get your taxes in order and file, the sooner you’ll get your refund,” according to Mawer. Important information about mutual funds is found in the Fund Facts document. Please read this carefully before investing. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Unit values and investment returns will fluctuate. Insurance products, including segregated fund policies, are offered through Beyond Business Financial Solutions Inc., and Investment Representative Nathan Garries offers mutual funds and referral arrangements through Quadrus Investment Services Ltd. |
AuthorNathan Garries is a Certified Financial Planner who has been involved in financial advising, financial planning and wealth management for over two decades, carrying on a family tradition of three generations. Archives
October 2022
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