Filing your taxes is kinda like getting a filling at the dentist. While it's very unpleasant, deep down you know it's necessary. To help make it as painless as possible we'll explain the deadlines, reasons to file and simplest way to get it done.
Deadline: April 30th at midnight. It's important to respect this deadline whether or not you owe the CRA money. Why?
If you owe money, this is the deadline to avoid interest and penalties. Interest is roughly 6%. On top of that, penalties start at 5%, plus 1% for each month that the return is late 😱.
If you're owed money, this is the deadline to make sure you don't miss out on benefits you may be eligible for (such as GST or Child Tax Benefits) and to ensure you get your refund in a timely manner.
Why File? To avoid penalties and interest if you owe money. Yet, even if you don't owe money, there are 2 major benefits to filing:
- You're probably entitled to get money back from the government. Cha-ching!
- You must have reported income to accumulate RRSP contribution room. To report income, you must file your taxes. Yep, this is the CRA's "carrot."
⏰Important Note⏰: Even if you never owe money to the government, you can be fined for not reporting your income in 2 out of the 4 last years. Will they come after you? Hard to say, but it's not worth the risk.
What's the Best Way to File? The two most common ways to file your taxes are using an accountant or an online software program. Online programs such as Turbotax are an extremely easy and affordable option. In fact, 90% of Canadians file electronically.
Your income information will be auto-populated from your My CRA account if you have one (My CRA is the CRA's online platform). Learn more or sign up for My CRA here.
The software will prompt you through the various tax deductions to see if you're eligible. Check here to make sure you don't miss out on commonly forgotten deductions.
Self-employed individuals who want to maximize all possible tax deductions may want to consider hiring an accountant. They know the ins and outs of taxation.
What documents do you need to have handy?
- Prior year’s notice of assessment
- SIN number
- T4 (provided by employer)
- T3 & T5 (provided by your financial institution for investment accounts)
- RRSP contributions paid this year up to the end of February
- Charitable donations
If these apply to you, you'll also want to know your annual amount of:
- Tuition fees
- Interest on student loans or loans paid to earn investment income
- Child care payments
- Work-related vehicle costs (which can be tracked here)
- Spousal support payments made or received
- Home office expenses
- Out-of-pocket medical expenses (if over $2,302 or 3% of your net income)
- Pension income
The most annoying thing about filing taxes is the time it takes. To make it more bearable, grab a buddy 👯, your TurboTax software (and delicious snacks obviously 🍕) and then walk through it together.