The Canada Revenue Agency (CRA) has put together a list of things to avoid this tax season. Follow these tips; they could save you time and money!
Not filing an income tax and benefit return because you had no income
If you have no income to report, you should still file a return. You may be eligible for a refund and credits and benefits such as the goods and services tax/harmonized sales tax credit and the Canada child tax benefit.
Not reporting all your income
When filing, it is important to make sure you report all your income from all your slips, such as T4s. Slips are prepared by your employer, payer, or administrator. You should have received most of your slips and receipts by the end of February. If you have not received, or have lost or misplaced a slip for the current year, you can ask your employer, or the issuer of the slip, for a copy. If you register to My Account you can also have access to electronic copies of your slips. If you are missing information, use any documents you have and enter estimated amounts.
Beginning this year, if you file your return online, you can save time by using the CRA’s Auto-fill my return service, available through some certified tax preparation software. This secure service will automatically fill in certain parts of your income tax and benefit return. To use Auto-fill my return, you must complete your registration in full for My Account. For more information, go to www.cra.gc.ca/auto-fill.
If you already filed your return but did not report income from a slip, you can change your return by using the “Change My Return” feature in My Account or by filling out Form T1-ADJ, T1 Adjustment Request, and sending it to your tax centre.
If you fail to report an amount of income two times within four years, you may have to pay a federal and provincial/territorial penalty for repeated failure to report income.
If you want to correct earlier mistakes and put your tax affairs in order, you can make a voluntary disclosure through the CRA’s Voluntary Disclosures Program. The program gives taxpayers a second chance to correct their taxes.
If you have a balance owing and do not file your return on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2015 balance owing on the due date of your return, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. Even if you cannot pay your balance owing by the filing deadline, you can avoid the late-filing penalty by filing on time.
Missing out on new tax credits, benefits, and deductions
New credits, benefits, and deductions could be introduced each year, some of which may apply to your tax situation. Before filing your return, go to www.cra.gc.ca/getready to learn about the new and existing tax measures that will help save you money. Some certified tax software programs also offer suggestions on credits, benefits, and deductions you can apply for based on the information you entered.
Not keeping receipts and records
Keep any receipts and documents for at least six years after you file for a particular year. If the CRA chooses to review your return, you will need to submit your receipts to support your claims.
To learn about other common tax mistakes and adjustments, go to www.cra.gc.ca/commonadjustments.
Source: Canada Revenue Agency website