Taxes: anyone who claims to love doing them is lying! But with Bruce Sellery‘s help, they don’t have to be so painful. The MoneySense expert shares his advice on how to complete your taxes — from getting prepared, to what you should do if you are behind in filing.
Let’s begin:
Bruce advises everyone to begin with something sweet: a reward. Whether it’s a glass of wine, chocolates or looking at the new pair of shoes you want, start with that because no one loves doing their taxes but keeping a reward in mind (the tax return and what you can put it toward) may help you reach your end goal.
If you have a little bit of lead time, start with the paperwork. Find and divide your forms and receipts such as T4 slips, investment income slips, receipts for your kids’ activities and charitable contributions, your RRSP contribution receipt, etc.
Bruce suggests keeping on top of these receipts throughout the year as they come in. Keep them in a file or even a shoebox; this will definitely pay off when you are tackling your taxes. For example, if you qualify for the maximum deduction for physical activity, it could be worth $1000 — you don’t want to lose out on that!
Should you pay someone to do your taxes for you, or should you do it yourself?
If you are unsure whether or not you can handle your taxes on your own, there are three variables you need to consider, Bruce says:
- Complexity: Can you handle the work by yourself? Is it too complex?
- Competency: Do you have the basic skills to do it?
- Enthusiasm: Do you not hate it?
If any of the above is an issue, consider hiring an accountant or using an online tax filing service such as TurboTax. The online services are fairly inexpensive, they prompt you to ask questions, and remind you of the papers you need.
What happens if you don’t do your taxes?
If you’re owed money by the government, you won’t get it. If you have a salaried job and they have been withholding tax at source, you may be eligible for a refund but you won’t receive it. And don’t forget about the credits you may qualify for — if you’re unemployed, on maternity leave, or have kids, you may be in line for a refund. Don’t leave that money on the table!
If you owe money and don’t file, the consequences are significant. If you miss the deadline, April 30, by a day, the government immediately levies a 5% penalty on what you owe, plus an additional 1% every month you are late.
The one exception from the penalty is if you have had a significant life event, for example, if you are diagnosed with a serious illness. If so, you must call the CRA, prove it, and see if you can work something out to avoid the penalty.
What if you haven’t filed your taxes for years?
This is the time to say, “I need help,” and call a professional. They will walk you through exactly what’s required so that you can make a payment.
Courtesy of Bruce Sellery
www.moneysense.ca
www.moolala.ca
@brucesellery