Here are some quick afterthoughts from the tax season. Being well organized will ensure the task of doing your return is painless and quick. Another plus of being organized is that you will be able to take advantage of all of the claims you are allowed.
Start gathering your documents at the beginning of the year, especially if you contribute to RRSPs or make charitable donations.
This is what I have noticed from taxpayers’ situations:
1. Medical expenses: Taxpayers often are not aware of all the expenses that qualify as a tax credit. Any expenses that you pay for you, your spouse, and dependents INCLUDING extended health care premiums will qualify. The amount has to exceed 3% of the claimant’s NET income. In the case of a couple the lower income spouse should claim.
2. Donation efficiency. You can carry forward donations for up to 5 years so don’t waste them. Donation amounts over $200 qualify for almost 2 times the credit as donations less than $200.
3. Keep track of capital gains and losses. A loss can be carried back 3 years to offset taxable gains or carried forward indefinitely for the same use. This applies to stocks you might be receiving through your work plan, if you cash them in.
4. Child care expenses and RRSP contributions can only be used as deductions against EARNED income. Be careful here, because earned income for both those deductions is defined differently.
5. If you collected EI or maternity leave benefits, a bonus or severance could result in you having to repay some of the benefits. You will also repay if you had EI benefits within the last 10 years.
6. If you contribute to a pension plan be aware that pension contributions will decrease your RRSP contribution room.
7. If you consistently get a large refund every year then you have basically lent some of your salary to the government for a year. Consider asking to have less tax deducted monthly, so you will have more money in your budget. Ask me for the form.
The auditor general has found that CRA gives wrong replies to taxpayer queries 30% of the time. Also to meet their call quota they will often not even answer calls.
CRA does not like late taxpayers and has become quite aggressive in pursuing taxpayers. Their tactics can be quite harsh and can include informing employers and garnishing wages. You may think that because you are a small potato that they will not bother with you but please don’t take that chance. I am always here to be your advocate and to guide you through the taxpaying process with ease.