income tax return

Five common mistakes that you could easily avoid when filing your tax return: Advice from a North York accounting firm

Soon enough your income taxes will be due and while you may be tempted to rush through the process and get it over with as quickly as possible, it’s best not to file your return hastily. The errors that you could make or omissions that could take place could result in a delay in receiving your refund or even not being granted certain benefits or credits. It may even result in a penalty.

S & P Accounting Services (a North York accounting firm) discusses five common mistakes that you could easily avoid when filing your tax return.  They are 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim.

We discuss them in more detail below.

1.Failing to file your income tax return

Perhaps you didn’t show income in Canada for 2017 or perhaps your income is tax exempt. Even if you fall under one of these two categories, you are still obligated by law to file your tax return. In fact, you will only receive credits and benefits that you are eligible for if you file your return.  Here are some benefits and credits that you may qualify for:

2. Discarding records once income tax return has been filed

Another common mistake that people may make is that once they file their tax return, they discard their records. Records are  “organized accounting and financial documents that summarize your transactions” and include the documents to support these transactions. For instance, records include, purchase receipts, income tax returns, sales invoices, contracts, banks statements, canceled cheques, credit card receipts, work orders and all correspondence that supports your transactions. Here is a full list of documents that fall under the category of records.  

Keeping these documents is not limited to anyone who runs a business or carries out commercial activity. In fact, anyone who files a tax return is obligated by law to keep their records and supporting documents. Generally speaking, these records must be stored in a secure place for a period of six years from the end of the last tax year they relate to. Whether you decide to store your records as a hard copy or electronically, all records must satisfy the following requirements;

  • – be reliable and complete
  • – include the information needed to meet your tax obligations and to calculate your credits
  • – be supported by documents
  • – be kept in English, French, or a combination of these two languages

Keeping your records is vital in case the CRA  (Canada Revenue Agency) asks to inspect, audit or examine them. In the event that you are selected for review, all receipts and supporting documents that the CRA requests have to be provided at that time. If they are not provided within the set timeframe, your claim may be reduced or disallowed.

Here is a list of individuals and organizations that need to keep records.

3. Postponing filing income tax return because of missing slips

A third common, yet avoidable mistake that individuals may make is that they delay filing their tax returns because of missing T4s or other information slips. If you cannot find the missing slip(s) by the due date, use your pay stubs or statements to approximate your income and any deductions and credits that you may qualify to claim. Filing your taxes on time will help you avoid penalties.

For the majority of people, their income tax and benefit returns are due on or before April 30, 2018.  For self-employed individuals, and their spouses or common-law partners, their returns are due no later than June 15, 2018.1 It’s best to mark these days on your calendar and start filing your taxes as soon as possible. Otherwise, if you owe tax for 2017 and file your tax return past the due date, the CRA will charge you a late-filing penalty. You will be subject to pay 5% of your 2017 balance owing. Additionally, you will also be subject to pay 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

Note that if you are a self-employed person, and have a balance owing for 2017, you have to pay it on or before April 30, 2018. For more information on how to make your payment, see Make a payment.

Also, if you do not file your return on time (see exception to the due date of your return), benefits and credits that you might be eligible for such as Canada child benefit payments, old age security benefit, and other provincial tax credits and benefits payments may be delayed or stopped.

You should have received most of your slips and receipts by the end of February. However, T3, and T5013 slips do not have to be sent before the end of March. If you have not received, or have lost or misplaced a slip from 2017, you have to ask your employer, or the issuer of the slip, for a copy.

Yet, most important, even if certain slips are missing, file your return for 2017 on time.

4. Not notifying CRA of any changes to your personal information

A fourth common mistake people may make is not informing the CRA of changes to their personal information such as whether they are married, divorced, widowed, etc. and/or how many children they have. Changes to your personal information such as your marital status, the number of children in your care, your banking information and your address directly impact your benefit and credit payments. If there has been a change in your life, notify the CRA as soon as possible in order to ensure that you receive the benefits and credits that you qualify for.

5. Failing to keep a record of the eligible expenses you could claim

A final recurring yet avoidable mistake that people may make is that they neglect to keep a record of the expenses that are tax deductible. Generally speaking, you are required to have proper receipts to support all expenses claimed as eligible expenses.  

For instance, a proper receipt for medical expenses is one that indicates the purpose of the payment, the date of the payment, the patient for whom the payment was made and if relevant, the specialist (i.e., audiologist, dentist, medical doctor, etc.) who prescribed the purchase or gave the services.   A canceled cheque, on the contrary, is not acceptable as a substitute for a proper receipt.  

There are many expenses you may be able to claim when completing your income tax return such as child care expenses, employment expenses, medical expenses, education expenses, donations, etc.

Related: For information on eligible medical expenses, see Income Tax Folio S1–F1–C1, Medical Expense Tax Credit.

In order to reduce the taxes that you owe, it is best to keep a record of your receipts and any supporting documents. Receipts and supporting documents for employment expenses should go in a separate file than receipts and supporting documents for medical expenses. This way, when tax season rolls around, you will be able to accurately and efficiently claim your expenses on your income  tax return,

Summary

In summary, the five common mistakes that you could make on your income tax return are: 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim. These common mistakes are completely avoidable and could easily be prevented by keeping your records in an orderly manner and filing your taxes accurately and on time.  And finally, making sure to keep all your records in a secure place, will be important in case the CRA wants to review them.

If you need assistance filing your taxes, you may be eligible for help

If you have a simple tax situation then you may be eligible to receive help filing your taxes from a free tax preparation clinic near you.

There are free tax preparation clinics nationwide. Here are several located in different regions of Ontario.

Markham

Mississauga

North York

Richmond Hill

Thornhill

Toronto

Vaughan

You are not considered to have a simple tax situation if you are:

  • – self-employed or have employment expenses
  • – have a business or rental income and expenses
  • – have capital gains or losses
  • – filed for bankruptcy
  • – are completing a tax return for a deceased person

If you need assistance with your tax return or have any accounting inquiries, please do not hesitate to contact us at S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll, and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA.

Polina Presman, CPA, CA

T- 416-371-6017

F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031

F- 416-667-0404

S&P Accounting Services LLP

2727 Steeles Ave. W. Suite 300

North York, ON, M3J 3G9

www.spaccountingservices.ca

Disclaimer:

We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Here are some FAQs about income tax returns

Here are answers to some commonly asked questions about income tax returns

1. What income do I need to report on my income tax return?

All income is taxable. You’ll need to report all income on your tax return (also known as Income Tax and Benefit Return) and calculate how much tax you owe.

Income that you must report to the CRA (Canada Revenue Agency) includes:

  • Part-time and self-generated income
  • Employment income earned both inside and outside of Canada
  • Income from rental property or renting out a section of your house
  • Investments (e.g. interest, dividends, capital gains)
  • Being self-employed (e.g. a home business)
  • Your pension
  • Income from more than one job

2. Do I qualify for tax credits and benefits?

You may qualify for the following:

  • Ontario Children’s Activity Tax Credit
  • Ontario Political Contribution Tax Credit
  • Healthy Homes Renovation Tax Credit
  • Ontario Trillium Benefit
  • Ontario Senior Homeowners’ Property Tax Grant
  • medical expenses, caregiver amounts, disability amounts, etc.

All you need to do is file a tax return and fill in three forms ON 479, ON-BEN and ON 428.

If you are submitting a paper tax return form, complete and mail the forms below when you mail your tax return.

Yet, if you are submitting your tax return online, the majority of accounting and tax return software will automatically ask you questions related to tax credits and benefits.

3. What if I have no income from last year, do I still file a tax return?

It’s important to file your taxes even if you have no earnings.

Even if you don’t have an income from the previous year, it’s beneficial to file your taxes because you may be eligible for various government benefits such as, the Ontario Trillium Benefit, the Ontario Child Benefit and Healthy Smiles Ontario.

However, please note two cases which it is mandatory to file an income tax return even though you have no earnings from the previous year: 1. if you owe taxes to the government and 2. if the CRA sent you a request in the mail to file your taxes.

4. Will I receive a refund?

The CRA will process your tax return and mail you a notice of assessment. If you qualify for a refund, you’ll get money back.

How much money you receive is contingent on a number of factors: your location, age, the size of your family, how much money you make and your expenses. Not everyone qualifies for a refund.

If you owe the CRA money, you will receive a letter in the mail stating that you need to pay by April 30. You can pay online, at your bank, or by mail with a cheque or money order.

5. From where do I get a tax return form?

To get a tax return form, you can either:

  • Download one from the CRA website
  • Visit your local post office or postal outlet
  • Visit a Service Canada office
  • Call 1-800-959-8281

The tax return forms are available at the above locations between February and early May.

6. Can I get help completing my tax return?

You may be eligible to get help from a free tax preparation clinic if you have a modest income and a simple tax situation. These tax clinics are offered through the Community Volunteer Income Tax.

Remember to bring your tax information slips and receipts such as old age security (OAS), employment insurance (EI) and Canada pension plan (CPP) tax slips. Volunteers will need them to prepare your income tax.

If you do not qualify for free tax services, you can get help from an accountant or a tax preparation company.

Our professional chartered accountants are committed to assisting you with your tax return and are highly qualified at finding the best tax credits and deductions that will maximize your refund from the government. Here is some more information about our professional accounting services. If you have any questions about tax returns or any accounting related inquiries, please contact S & P Accounting Services.

Here is an infographic which provides answers to some commonly asked questions about income tax returns. 

Income tax return FAQs

Income tax return infographic

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Disclaimer: We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.