Tax time isn’t an enjoyable time of year for anyone, but filing your tax return needs to get done. That’s why we’re sharing a few tips to help you take care of your taxes as quickly and efficiently as possible this year and for many years to come.
Are you dreading the prospect of dealing with your taxes this year? Don’t worry, you aren’t alone. Fortunately chartered accountant Amitabh Bhatnagar shares his tips on how to get organized for this stressful time of year.
Check in with yourself
To get started, Bhatnagar advises taking a step back and having an objective interview with yourself using the FORM method. That means focusing on your family, occupation, recreation and money. Most of your tax concerns will be divided into these four categories. If you have kids, credits related to daycare, after-school activities, etc., will go in the family section. Your income and work credits fall into the occupation section. Activities and hobbies for which you can claim credits fall into the recreation category. Finally, investments and investment credits fall into the money category. This will give you a quick overview of which documents you’ll need to track down to ensure you have all the information you require.
Get everything you need
- Gather all the necessary documentation. Bhatnagar recommends taking a look at last year’s tax return, since much of what applied last year will likely apply this year. Of course, if you changed jobs, recently inherited money or had a change of situation, adjustments will need to be made.
- Track down all your income information. You will need your T4 slip from your employer as well as T3 and T5 slips from your banker or stockbroker if you have any investments. Identifying and documenting all your sources of income is an important starting point.
- Identify your deductions. RRSPs, union dues, professional dues, child care, moving expenses and employment expenses are just some of the many potential deductions you’ll want to make sure you claim. If you aren’t sure what deductions apply to you, find out at the Canada Revenue Agency (CRA). You don’t want to pay more than you need to, and the best way to ensure that doesn’t happen is by educating yourself on what deductions you are entitled to.
- Know your tax credits. You can get tax credits on a variety of expenses, such as public transit, a first-time home purchase, interest on student loans, tuition, children’s fitness and art classes and much more. Again, check out the CRA to make sure you aren’t missing anything.
Find out what you need to know about RSPs and taxes >>
Get it done
You might know what you have to do, but getting it done can be a whole other story. To take care of your taxes as quickly and efficiently as possible, Bhatnagar recommends giving it your full attention and hammering it out all at once. Rather than trying to do it in 15-minute intervals each day and running the risk of getting interrupted, give it your full attention. If you have kids, see if they can spend a weekend with their grandparents so you can stay focused. From there, create a detailed checklist, and get cracking.
Know when to seek help
If you have a single income, basic expenses and small investments, using a software program such as UFile might be all the help you need to get your taxes filed properly. But if you’re self-employed, a business owner or an independent consultant, or if you work in commission sales, have complex finances such as numerous writeoffs or a vast investment portfolio, seeking the professional assistance of a chartered accountant is likely necessary, explains Bhatnagar. A software program can’t offer you personalized advice for your complex needs. It also won’t look at your numbers to ensure they’re correct, reasonable and therefore not likely to be flagged for audit. If you feel at all uncomfortable sorting through your finances, the advice of an accountant might be what you need.
Remember what you’ve learned
If you were less organized this year than you could have been and feel stressed because of it, remember that feeling going forward. “Tax planning is a year-round process,” explains Bhatnagar. By holding on to all your necessary expense receipts and creating a summary each month, you can stay on top of everything and make tax time a lot easier on yourself. When you put it off, you might wind up missing out on deductions and credits, which will only hurt you in the long run. Get organized, stay organized and reap the rewards.