How To: Do a tax return
There is less than a month left until your Canadian taxes are due. Some people are super on the ball and have already filed… myself not so much. Anyways, last year I worked through a pile of tax returns so I’d like to think I kind of know what I’m doing. So here is my simple “how-to” when it comes to taxes, I hope it helps!
Step 1: Gather all your forms
By now you should definitely have them all but if you think you are missing one you can call the CRA to do a slip check. To do this you will need to have your previous years tax return as they will likely ask you security questions from it.
Some common slips include: T4’s, T4A’s, T3’s, T5’s, RRSP Contributions, Tuition Credits, Transit Passes, Donation Slips, and T2202 for students.
Step 2: Find an online software to file your return.
The CRA website provides an extensive list of all the available prodcuts to help you file your return. Some are free and others aren’t, just make sure you use the one that’s best for you. I hear H&R Block is good but I’ll be using Profile.
Step 3: Income
Most programs are fairly straight-forward, but the first thing you should do is input all your income. This includes anything on your T4’s, scholarship money (T4A’s – though it won’t be taxed), investment income (T5’s and T3’s), and other income that you earned during the year that doesn’t show up on any of these slips. My recommendation (though I’m not a professional) is to put other income in the other income category. If you put it under self-employed (you must meet specific criteria to do this) you open a whole different can of worms and it’s usually more hassle than it’s worth unless you are making a substantial amount of income.
Step 4: Deductions
A tax deductions reduces your income and thus reduces the amount of tax you will pay.
Some common tax deductions are: RRSP contributions,
union dues, interest expenses on loans, and childcare expenses (you must be making income to deduct childcare expenses).
Step 5: Credits
These are different from deductions, they apply to your overall taxes owing.
Common tax credits are: child fitness credit and child arts credit, disability tax credit, education tax credit, donations, and the first time homebuyers tax credit. There are tons of different tax credits out there, so it’s best to research your specific situation or talk to an accountant to make sure you are utilizing all the tax credits available to you.
Step 6: Deductible Expenses
Some expenses you can claim in your tax return.
Things such as: medical expenses, moving expenses (if you are moving closer to work), safety deposit box fees, and capital gains and losses.
Step 7: Netfile
The Canadian government is encouraging people to Net File this year, which I personally think is great. I haven’t done it yet, but I’ll let you know how it goes.
Some other things you can always look at are:
– pension splitting
For retired couples if one persons pension is much higher than the others they can opt to share their income with their spouse/common law partner so that they won’t be in such a high income tax bracket.
– filing common law
While the boyfriend and I aren’t common law by the Canadian or Alberta standards I did play around with what our taxes would be like. It was definitely interesting to see what happened, basically I got less of a return and he got more…which I kind of wasn’t okay with.
If you have any questions you can comment below or email me at mypenniesmythoughts [at] gmail [dot] com. I’ll do my best to answer any tax questions you have and if I don’t know the answer, I do have a large resource pool of accountants I can pull from.
You can also check out my interview with CTV on the implications of TFSA’s and RRSP’s for tax purposes!Source: mypenniesmythoughts.com