Doing your own taxes? Here are tips to make it easier
Posted February 3rd 2014
Whether this is your first time doing your own taxes or you’ve done them before, there is a certain amount of preparation time required to make sure everything is done right. Missing slips or deductions may mean you are paying more tax than necessary.
With the Canada Revenue Agency encouraging taxpayers to file online, tax software is a popular option for the DIY crowd. Your information is sent directly to the CRA, and this usually reduces processing time and the chance of a data entry error.
If you are planning to join the millions of Canadians filing electronically, here are some tips to make it go smoothly:
- Register for My Account: It’s the best way to find current information on your tax file, and will allow you to look at past returns and view any credits you have, check your RRSP contribution limit, and much more. But it takes a few days to get the account open so do not leave it until the last minute. Once you submit your return, you can track its status using My Account, including any payments you made as well.
- Using NETFILE: This allows you to file your return electronically. You cannot file using NETFILE alone: you must use a registered tax software program. However, you no longer need an access code. Your SIN and date of birth are used instead.
- Get a tax guide: Yes, you are filing online but getting a current copy of the Tax Guide from your local post office or online can be helpful because it lists the new credits available this year. And the guide can provide more insight on specific lines of your return. Just because there is a line to deduct legal fees or support payments doesn’t mean you’re eligible to use those claims.
- One sitting: This is particularly important if you’re preparing a return for a spouse and dependant at the same time. Use a tax checklist to make sure you have all your slips in one place before you start. If you need to go look for a slip while doing your paperwork, it is easy to forget where you left off, and you may overlook something important by the time you return. Doing everything in one sitting can help eliminate these kinds of mistakes, and once you’re done you can leave it for a day and double check all your numbers with a clear head tomorrow.
- Needs to make sense: If you were expecting a $200 refund and the software program says you owe $5,000, you should double check your calculations. The same applies if the refund total is much larger than expected. Unless your life situation has changed, your return should not change drastically from year to year. It’s easy to enter a number incorrectly, so review each line of your return to ensure you didn’t transpose a number or forget to enter a value.
- Save your receipts: You may not send paperwork to the CRA when you file but you need to keep all your slips and receipts for seven years. The CRA does random checks to ensure taxpayers are claiming the correct credits and deductions. And some claims, like moving and childcare expenses, are more likely to be reviewed. Without the proper documentation, the CRA will disallow your claim and reassess your return.
- Last-minute slowdown: It is human nature to procrastinate and you are not alone if you wait until April 30 to file. But the NETFILE system will be busier and it will take longer to file. If you have all your slips, file early and avoid the frustration.
If you are expecting a refund and file electronically, you may receive the money in as few as eight days. If you are still using pen and paper, you can expect to wait a little longer, and the CRA to continue to encourage you to file electronically next year.
If you prefer to file your taxes online, use H&R Block’s fast and intuitive do-it-yourself software. It’s free, there’s no download required and it works for all kinds of tax returns.
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