Now that you’ve all received your tax slips for the year (T3 slips were mailed out at the end of March) it’s time to start filing your taxes!
Sign up for CRA Online Access If you haven’t signed up already, now would be a perfect time to head on over to CRA’s website and sign up for your online access. This will give you access to file your tax return quickly, receive your refund even faster, and grab any slips you may have lost or not received in the mail. This also will allow you to update your address and marital status should those change during any taxation year.
The trick with RRSP deductions is that you don’t have to claim them in the year you made the contributions. Many people think that this is the case, but it isn’t. It is more beneficial to claim your RRSP contributions in a year when you are in a higher income bracket. Meaning you should save your RRSP contributions until you are making more income. You can carry forward these contributions until the age of 71, so relax, you have time!
Filing Common Law
There is a lot of discussion around when you have to start filing common law with your significant other. While the provincial laws can vary from province to province, the federal law, and therefore the tax laws are quite clear. If you’ve been living together for 12 consecutive months you are considered common law and should update your status with the CRA, and file as common law. Check out this handy guide I created last year to smooth out the process.
Transit, Medical, & Donations
The biggest issue people have when claiming these deductions on their tax returns is that they don’t have the documentation to support their claims. If you want to claim medical expenses you need to have your receipts for expenses that have been paid by you for a 12 month period that ends in 2016. These expenses must be at least 3% of net income, or an amount greater than $2,237. It’s in the best interest of the lower income earning spouse to claim these. Transit passes are eligible for a credit in 2016, but this is the last year it will be available, so make sure you have your receipts.
Business Income (For the hustlers)
If you’re anything like me you have a hustle or two, which means you’re earning income on the side. If you’re running a business and you have business income and expenses you’ll need to include those on schedule 2125. If you’re earning some extra income that probably wouldn’t be considered business income (tips from serving, tutoring, walking dogs …etc) you’ll want to include this income on line 104.
Sometimes I get really fussed because there is a lot of information out there that can be harmful to individuals. I know there is a rumor out there that you should only claim 10% of your tips, and some people say things about taxes when they don’t actually know what they are talking about. I know this probably seems like I’m over-reacting, but this is so dangerous, not to mention illegal. Many people think that the CRA won’t go after them, but if they look into the business you work for ou could easily be looked into. If you aren’t being honest then you could get hit with tons of punitive taxes and penalties which obviously is less than ideal. Not to mention, once you’re on “the list” CRA will find a way of looking into you on a go-forward basis. Not fun. If you’re ever concerned about what you should include in income, or what you’re allowed to deduct for tax purposes, please seek out a tax professional. I love all the personal finance bloggers on the internet, but not all of them are educated to talk about complex tax matters.
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