Spring is coming and the mercury is rising, but it’s not the temperature that’s making people sweat. Tax season is upon us, bringing days of head scratching, nail-biting and forehead banging to rate payers coast to coast. The Markham Review caught up with local chartered professional accountants Tim Reynolds, owner of Reynolds CPA Professional Corp., and Peter Still, to get some tips to make filing a return less taxing.
What’s new for personal income taxes this year?
To put it plainly, if you’ve got little ones you’re in luck.
“Most of the changes are related to children and some of the credits around children,” said Reynolds.
“The child care expenses, for daycare and things like that, those amounts have been increased by $1,000 per child.”
The Universal Child Care Benefit has increased to $160 per month for children under six years old and there’s a new benefit of $60 for kids between six and 17, said Still. “On student loans, they’ve opened it up so you can now claim interest on Canada apprentice loans too.”
Where can people find information and assistance while they are preparing their returns?
Both accountants agree that seeking professional help early in the process can set people on the right track.
“Normally the situation is much less (complicated) than it seems to them,” said Reynolds.
For those focused on going it alone during tax season, help is just a click or phone call away.
“The software you can get these days hopefully can lead them through and answer all their questions,” said Still, adding the Canada Revenue Agency is also an excellent resource.
“There’s all sorts of information on the internet. It doesn’t mean it’s all true. If you contact the CRA or a professional accountant you’re going to get good information,” said Reynolds.
What can people do to make filing their return less hectic?
Reynolds and Still stress organization is key when embarking on the annual tax task.
“Some mistakes people make can be losing things, losing paperwork and missing documents,” said Reynolds.
“I always recommend people have some sort of system, whether it’s just a file folder to put all your tax documents in throughout the year. At the end of the year, to go back and find them all is a much more cumbersome task.”
Documents to save include charitable donation slips, medical expense receipts, childcare documentation, rent receipts and property tax bills.
Should the modern day taxpayer leave paper filing in the past?
While some tax purists swear by the old pen and paper returns, both Reynolds and Still insist filing an online return whenever possible is the best way to go.
“You have to send in T slips and stuff like that with the paper filing. With the online filing, you keep your records and the CRA can request the information,” said Still, adding refunds typically come sooner with an electronic return, cutting the wait from about eight weeks to two.
Reynolds said the paper booklets can be overwhelming and something the CRA is slowly moving away from.
“When you file a return online there’s a spot to put in your email address so you can get communication back and forth that way. They’re trying to really push that,” he said.
“It’s possible to do paper filing returns, but it’s more complicated. The chances for error are higher when you’re doing a paper return versus an electronic return.”
What types of people might find professional tax help useful?
Still said accountants can help make sense of more complicated returns, like ones involving different employment arrangements, investments or multiple income sources.
“Anytime you’re self-employed, usually people need assistance with that. If you’re retired and you have a pension, some seniors always need help with splitting their pensions and getting the full benefit of all their medical deductions,” he said.
Seeking help from an accountant isn’t just for people with out of the ordinary returns. Still also sees clients who find the process confusing, stressful or overwhelming.
“I also get people that really are not comfortable doing their taxes and I just ensure that they get all their deductible expenses accounted for.”
Six Common Tax Mistakes People Make
1. Not filing a tax return – Those who don’t can miss out on Ontario Trillium benefits and HST credits
2. Not splitting investment income – If the investment T-slip lists more than one name on it.
3. Not taking advantage of spousal pension splitting.
4. Not maximizing RRSP contributions – Especially for people in a high marginal tax rate.
5. Not claiming eligible home business office expenses.
6. Forgetting to list the tuition deduction or transfer amount.
Source: Peter Still, CPA CGA