With the upcoming personal tax filing season just around the corner, it is essential that you avoid these five pitfalls while doing your personal taxes.
1) Do not forget to claim a tax credit for your medical expenses. This is one of the most missed tax credits every single year. So don’t forget to gather your medical receipts for prescription drugs, visits to your doctor, dental treatments and prescription lenses among others.
2) Do not claim moving expenses just because you moved closer to your new place of employment. To qualify for a tax deduction for moving expenses, you must have moved 40 KM closer to your new work place. This is calculated by comparing the distance between your old home and your new work place to the distance between your new home and your new work place. Remember, moving expenses are the most audited tax claims each year because many tax payers just don’t do the math correctly. To find out more information on moving expenses, please read this article on how can I reduce my taxes in Canada.
3) Do not throw away your tax receipts. While you do not have to submit your receipts to the CRA if you electronically file your tax return you still have to keep your receipts in case the CRA asks to see them, or in the event of an audit.
4) Tax laws change every single year, and you need to be aware which changes will affect you. To do this, visit the CRA website to see the new tax deductions and credits for the year. The biggest changes for the 2014 tax year is the family tax credit. This credit allows you to transfer $50,000 of income from the highest earning spouse to the lower earning spouse. This helps your family pay less tax overall.
5) Even if you have no income or very little income in the year, still file a tax return. This is because you are eligible to receive refundable tax credits only if a tax return is filed for the year, such as the Canada Child Tax benefit or the GST/HST tax credit.
So Here’s the Tip:
Avoid these five pitfalls while filing your taxes this year.
If you are planning on preparing your own return this year, please have a look at our 2014 personal tax return checklist for some guidance. Also make sure to have a look at this article on what 2014 personal tax credits you can claim.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.