April 30th will be here before we know it, and we all know what that means: the final day to file our personal taxes. Accountants will be working late and Canada Post will likely be extending their regular business hours to make sure people can get their taxes in on time. But, why all the procrastination? Could it be that we're a little scared of the CRA (Canada Revenue Agency)? Logically, it doesn't really make sense; they’re simply a government agency, like so many others.
So, let’s take the fear out of taxes! Here are 10 surefire ways to become a fearless filer.
1. File Every Year
Take the burden off of yourself by filing every year and avoiding extensions when you can. It can be difficult to remember what happened 3 or 4 years ago, and often even more difficult to track down all those receipts and T4 slips.
2. Stay Organized
Shoe boxes can get messy. Instead, set up a file folder to organize receipts as they're received; the same applies for charitable donation receipts. Then, come March or April, all you have to do is pull out the folder and ta-da, there is all the paperwork you need to file your taxes.
3. Keep Past Returns Handy
When doing your taxes, you’ll often need to refer to previous filings. Keep them in a separate file organized by year so they're easily accessible when you start to file for your current year.
4. Consider a Digital Program
If you’re the tech-savvy type, Intuit TurboTax has programs that can walk you through the filing process and help you understand all the information you need to input, while also offering tax saving tips. Even if you’re a bit of a technophobe, the programs make filing easy. Plus, programs vary in price depending on what you need; with their Standard program, you can file up to eight returns, so the cost is less than $5 a tax return.
5. Use Auto-fill My Return (AFR)
If you have a CRA My Account and use tax preparation software, like the aforementioned TurboTax, Auto-fill automatically imports T slips (including your work T4), RRSP contributions, unused tuition, education and textbook amounts, Home Buyers’ Plan and Lifelong Learning Plan Balances, and losses from the previous year. This makes things simpler while ensuring the greatest refund.
6. File Even if You Didn't Work
If you are over 19 years old, then you should always file your taxes, even if you don’t have an income to declare. By filing the return, you can receive GST rebates, and, in Ontario, the Trillium grant.
7. Don't Spend Prematurely
Expecting a refund? Congratulations! But, don’t start spending it just yet; wait until you’ve filed the return and received the refund. You don’t want any surprises.
8. Understand that Your Refund May Vary
The refund you get this year could be less than last year’s. For example, if you started working in April 2016, you may have received a substantial refund that year because you were taxed at a certain rate, yet only worked for nine months, resulting in an overpayment on taxes; then, in 2017, you worked the full 12 months resulting in no overpayment. I recently prepared a friend’s son’s tax return and this applied to him; his 2016 refund was $800 and his 2017 refund will be just $16 (again, another reason to heed #7 on this list).
9. File On Time—Even if You Owe
We’re always anxious to get a refund, but when it comes to paying the CRA... not so much. If you wait to pay, you will be charged a penalty for not filing on time, on top of the interest charged. By filing on time, you will still have to pay interest on the unpaid balance, but there won’t be an additional penalty to pay.
10. Don't Let Knowledge or Cost Hold You Back
There are many methods of preparing taxes if you can’t do your tax return on your own. You can turn to a tax-friendly friend; use tax software, like TurboTax; or hire a professional tax preparer. However, if cost is a concern, you can also check online to see if there is a volunteer program in your community. They’re more common than you think!
Don’t be intimidated by taxes. Take charge now and you’ll be able to reduce stress—and maybe increase your refund! Remember, if you aren’t prepared this year, you can be better prepared for next year by following these tips for filing without fear.
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