Here are five costly mistakes to avoid when putting together your return this year:
NOT FILING AT ALL
As long as you live in Canada you really should file an income tax return!
Those who do not file are prevented from claiming certain tax credits and benefits that all Canadians are entitled to, regardless of their income bracket.
You can also claim things like medical expenses, educational expenses, and child care expenses if you didn’t make any income.
NOT CLAIMING MEDICAL EXPENSES
Medical expenses that not covered by provincial health services or benefits plans are another commonly neglected area, especially for low- and middle-income Canadians.
When you have medical expenses that are relatively high compared to your income you can qualify to get a medical expense supplement that will refund a portion of the medical expenses claimed.
These include: eye exams, dental expenses not covered by insurance, medical supplies (mattresses can even qualify if you have a prescription) and travel expenses. This year you can claim cannabis products that CRA will consider eligible for the medical expense tax credit, but ONLY if you have a prescription!
You can claim your total eligible medical expenses, minus three per cent of your income or the set maximum for the tax year ($2,352), whichever is less.
Whether you are making extra money by driving an Uber, Entertainer, hosting people at your Airbnb, or earning a little side cash online, you want to make sure you are recording those earnings. This is considered self-employed income.
You CAN claim expenses related to that income (i.e. expenses related to your travel, vehicle, or house expenses), make sure that you have the receipts to back it up and only claim the portion directly related towards your business.
Before filing, make note of your investment streams and make sure you have received a statement for each of them. These annual statements should show the total income you earned during the tax year and the total expenses incurred, such as investment adviser fees (which are deductible).
“Income sometimes gets missed because people don’t understand how much they’ve earned on their investments each year,” Armando Minicucci, tax specialist at Grant Thornton, told CTVNews.ca by phone.
“This is generally the most common area where individual tax payers are reassessed.”
FILING TOO EARLY
The early bird doesn’t always get the worm, especially when it comes to taxes.
“Those early filers who are hoping to get their refunds right away tend to miss certain documents, whether it be T4’s from their employers or investment slips from the bank, professional tax prepares can get access to these forms through represent a client to ensure you are not missing any!
If you make a mistake here, it could put you at risk of incurring penalties for misreporting your income.
April 30 is the last day to file your 2019 income tax return. If you owe the CRA money, it must be paid by this date. Otherwise, you’ll face a late-filing penalty and daily interest chargeson your balance.
If you are self-employed, you have until June 15 to file your return. But keep in mind that if you owe taxes, you’ll still be required to pay your balance by the April 30 deadline.
If you have any questions, concerns or work needing to be completed, please feel free to reach out to MOM and book you FREE initial consultation.