It’s tax time!
March 18, 2016
OK, last weekend’s brilliant spring weather is behind us, and this week’s snow makes this weekend the prefect time for organizing your 2015 taxes, if you have not done that already.
True, your T3, T5013 and a few other slips won’t be mailed until the end of March, but your T4s, T5s, capital gain/loss reports, trading summaries, investment income reports and other info should all be received by now. Getting a head start on organizing and comparing your slips to last year will make your filing so much easier. This is true whether you prepare your own return, or use a professional to finalize things.
I read last week that some 25% of self-filers prepare their return in the very last week before the April 30 deadline. Don’t be one of those, as it radically increases your likelihood of mistakes, and may even increase your prospects for audit.
Start by reviewing your 2014 return and making a list of information slips to use as your check that all have been received this year. You can then follow up on any missing slips before getting fully engaged in the preparation process.
If you have a complicated situation, then using a professional accountant likely makes sense. Best you focus on what you do best.
On the other hand, if you have a relatively simple tax situation, a computer and an interest in your own finances, then preparing your own return can make sense, and also can teach you a lot about your financial situation and how to improve it.
With the software available now, personal filing is easier than ever. CRA is helping with a new initiative called Auto-fill, to help populate your return with your basic information. Much of this has already been available with commercial software, but it ties in nicely with your CRA “My Account” registration and the NETFILE utility.
To register for My Account and prove who you are, you’ll need your SIN, DOB, postal code, and the dollar amount from line 120 of your 2014 return. A new service this year allows customers of seven banks (so far) to use your online banking username and password to sign into CRA’s My Account and through that, access your tax information.
A lot of this can save you time, as it gives you access to your return and your filing information, allows you to adjust your return or your direct deposit information online, make payments, and many of the other modern conveniences we have come to know through using online access to everything.
Information on all of this is available at http://www.cra-arc.gc.ca/esrvc-srvce/tx/psssrvcs/rgstrtn-eng.html
Maybe the best place to start is www.cra-arc.gc.ca/getready.This is the CRA’s checklist, with info including how to NETFILE your own return and a list of certified software vendors, most of whom provide free versions for certain taxpayers. CRA has a series of online videos to help you through each step of the filing process.
There are several points that I’m trying to make here:
1. Everything has changed since we all prepared our returns on paper, making it a lot easier to input information and, especially, to make changes when that last unexpected slip arrives;
2. Software does most of the work;
3. Most returns will be electronically filed this year, and paper is phasing out;
4. This all makes it easier to contend, as I do, that tax preparation is fun!
Remember things like pension transfers between spouses, credits for children’s sports and artistic activities, credit for providing care to a dependent family member, monthly transit passes, tuition and post-secondary education credits (or transfers of these from children).
This may be the last year for the “Family Tax Cut”, which allows a credit created by transferring up to $50,000 of income from the higher income spouse’s return to the other spouse. This is only for households with children under 18 in 2015 and will be phased out by the new government.
Your additional items might include:
• RRSP contributions
• RRIF or LIF re-contributions • Donations (including first time donor’s “super credit”)
• Child care expenses • Home Buyer’s Amount (1st timers)
• Pension credit • Age credit
• Disability tax credit (requires a special application and medical certification)
So, you’ve got tax credits, deductions and free stuff - what could be better than filing your tax return?
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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
Please consult legal, tax, insurance and investment experts for advice on your unique situation.
David Christianson, BA, CFP, R.F.P., TEP, CIM is a financial planner and advisor with Christianson Wealth Advisors, a Vice President with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.