Monday, March 29, 2010

File Your Tax Return Now

Yes, I know, even though we don't like it, it's that time of the year again when a taxpayer's thoughts turn to filing those pesky tax returns. The Globe has a good article why you should file asap. Makes sense to me.

"Having to tackle that dreaded pile of paperwork known as taxes at a time of year when the weather is practically pulling you outside seems sinful, so why not put it off for just another week?
With the April 30 filing deadline roughly a month away, the danger of procrastinating for too long is that you will cobble together a sloppy return and make a costly mistake, one that could ultimately leave you with less money in your pocket.
"When time is not on your side, you are in a rush," says Cleo Hamel, a senior tax analyst with H&R Block Canada. "If you owe money and don't pay on time, the panic is that you will have to pay a penalty."
Facing that kind of time pressure, most people will not take the time to find those medical receipts or the ones for their child's hockey lessons. "Most people just file what they have handy. Which means they are settling," Ms. Hamel said.
There are a number of child, home and spouse-related credits and deductions that you can potentially claim to trim your family's tax bill, but rest assured that Canada Revenue Agency is not going to point them out to you. It is up to you to make sure you are taking advantage of everything that you are rightfully allowed to claim.
Sadly, finding that medical or hockey lesson receipt three years later is not going to cut it. By then, it will be too late.
Ms. Hamel points out these common mistakes Canadians make when they file their taxes:
1 Receiving a refund means your tax return is correct.
Even though you may receive a refund cheque or deposit with all of the credits you claimed, the Canada Revenue Agency can ask you to provide receipts or documents to review your return. The review process tends to start in July with thousands of taxpayers receiving letters asking for more information. If you don't provide the information within the right time frame, the CRA will re-assess your return without the credit included, which usually results in a tax bill. Moving expenses and the tuition transfer credit are two of the most reviewed credits.
2 Procrastinating.
Waiting until the last minute to prepare your return usually results in a rush and a much higher probability that you will miss something. Even if you don't start preparing your return early, do review your slips and make sure you have everything ready to file. If you are missing a slip, this gives you time to search for it. Then set aside some time before April 30 to prepare your return so you have an opportunity to ask questions.
3 The Canada Revenue Agency will correct mistakes.
If you make a mistake declaring your income, the Canada Revenue Agency will certainly notify you of the error and any taxes owing. But if you miss a credit or deduction, do not assume they will correct your return. It is not the CRA's job to make sure you take advantage of the credits you are allowed to claim.
4 Carrying forward old receipts.
Taxpayers who find medical expenses or slips after they have filed their returns cannot just add it to the following year's tax return. You have to file a T-1 Adjustment to include the slip on your previous returns. You can go back up to 10 years to correct errors but adjustments have to be filed on paper and can take six to eight weeks to process. The only exception is charitable donation receipts, which can be combined for up to five years.
5 Income splitting.
Only certain taxpayers are allowed to split income on their tax returns. Business owners can split income with their family members if the family member works for the company and normally a person would have been hired to complete the work. Eligible pension income can be split but you must complete a Form 1032 and submit it with your tax return in order to claim it. Or if you are collecting Canada Pension Plan payments, you can split this income as well, under certain conditions, but you must apply to Service Canada.
6 Overpayment of CPP and EI.
If you have overpaid CPP and Employment Insurance during the tax year, you have to include Forms 2204 (CPP) and Form PD24 (EI) in order to make a claim. If you are using tax software, it will do this automatically. If you are completing your return manually, you need to make sure your forms are included in order to receive the credit. And there is a time limit for claiming the overpayments."

Those of you out there who haven't even looked at your returns, better get busy. That deadline will come faster than you think. Besides, if you do it now, you'll have that monkey off your back for another year. Plus if you have a refund coming, you'll receive it sooner. Isn't that an incentive? If you owe, just get it over with, the sooner the better.

My husband and I completed our returns last night and will be in the mail later today. Good luck, happy tax return filing, and I hope each of you end up with a refund!
Don't forget, the deadline to file is April 30, 2010

No comments:

Post a Comment

This is my home. I hope you respect it. I will not tolerate profanity or anything that is not suitable for family consumption.