When it comes to personal tax filing, there are rules and guidelines that every individual must adhere to. Whether you’re employed or self-employed, mishaps when filing personal taxes can have severe consequences, including incurring penalties and losing a refund. Familiarizing yourself with personal tax filing errors can help save time while ensuring a simplified process. Outlined below are five personal tax filing mistakes you should avoid this year.
1. Missing tax filing deadlines
If you fail to file your personal taxes by the tax filing deadline (April 30), the CRA will charge you interest on the amount owed, beginning the day after the deadline. The interest increases daily, rapidly raising the total debt. In addition, the CRA (Canada Revenue Agency) can collect unpaid personal taxes by seizing your bank accounts, garnishing wages, and placing liens on your properties.
Filing your taxes before the due date can prevent the consequences associated with late tax payments. If you miss the deadline, we can help you in preparing and submitting your late tax returns.
2. Missing credits and deductions
While credits and deductions help lower your taxable income, you might not claim everything you’re entitled to. Although this won’t result in fines or penalties, it’ll likely lead to paying more taxes than required. Some of the credits and deductions you might overlook include the following:
- Charitable donations
- Medical expenses
- Moving expenses
- Childcare expenses
- Professional union and association dues
- Disability tax credits
Familiarize yourself with the Canada Revenue Agency’s list of credits and deductions for which you might qualify. Keep track of every document and receipt that supports your claims. You don’t need to submit any receipt when you file your tax return online. You can find all about tax credit and deduction on our support page.
3. Not reporting all your income sources
Failure to report all your income sources is an omission you’ll likely make when filing personal taxes. It’s crucial to report all the income you got during the tax year is essential, including:
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Employment income
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Rental income
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Self-employment earnings
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Investment income plus any other taxable income
Keeping accurate records of your income sources throughout the year can help avoid this mistake. Collect all the necessary tax documents, including T5 statements and T4 slips, and self-employment income receipts.
4. Failure to report your marital status accurately
Accurate reporting of your marital status is key to determining your eligibility for specific credits and benefits. Misreporting your marital status can affect your ability to transfer or pool particular tax credits when maximizing claims for charitable donations, pension splitting, and medical expenses.
Understanding how the Canadian Revenue Agency defines different relationships when it comes to filing taxes and when you’re required to report a change in your marital status can help avoid the risk of committing this mistake. The law considers you common-law partners if you:
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Stay together in a conjugal relationship for a minimum of 12 consecutive months
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Have a child together by adoption or birth
5. Not seeking help
Although filing your personal taxes yourself can help save money, the process may seem complicated, increasing the possibility of committing a mistake. With simple questions written in plain English and step by step guidance as part of our online tax filing program, we have made tax filing easy for everyone in Canada.
You can check our support page to learn about all the tax credits and deductions. If you need help, our support team provides free support and will help you in completing your tax return online.
Once you complete your tax return, our program will show you a summary for your review. It will show you your tax refund or balance owing. If you don’t have the money to pay your outstanding balance, you can consider taking a payday loan to avoid penalty on outstanding balance. Your outstanding balance is due on Apr 30. Click here to learn how an online payday loan works.