Whether you’re filing taxes for the first time or you’re a seasoned pro, the experience can be stressful. Asking the right questions and planning ahead can provide savings now … and later.
1. Will you file online on your own or rely on a tax professional?
Filing online is a good idea for a straightforward tax situation and without deductions. (Think traditional 9-to-5 jobs where you’re getting a steady paycheque and taxes are already itemized and deducted by your employer.) You’ll save the cost of a professional consultation and if your return is simple enough, software can even be free.
If you’re self-employed and kept great records with accounting software, you could also file online. However if it’s your first tax year self-employed, you might want a little guidance.
For more complicated tax situations, deductions can get confusing so a tax professional can really help.
2. Are you organized?
Watch your mailbox and email for needed forms: T4 – Money paid by your employer; T5 – Money earned from investments; T3 – Money earned from a trust; T4RIF – Earned income from an RRSP; T4RSP – Earned income from an RSP.
Ensure receipts are organized into different kinds of expenses – office equipment, utilities, meals, etc.Tax preparation software should let you scan or upload receipt images, to organize each cost. And if working with a tax professional, organizing ahead makes the process much easier.
3. Do you have self-employed income?
We’ve seen a huge rise in the “gig economy” – freelancers, independent contractors and side hustles of all kinds – and even without registering as a business, income earned from a side job needs to be reported with a T2125 form. First time filing self-employed income? You might want to consult a professional.
4. Do you have tax deductions? Dependents?
Major life events can increase tax deductions, including buying a home, purchasing a new car, moving to a new place for a job or paying student loans.Do a little research or consult a professional to see if you qualify.
If you started a family, deduct your dependents on your taxes. If you share joint custody, you can both claim your children, but if paying child support, you’re ineligible. The Canada Child Benefit will adjust the amount you can claim, depending on your income. If children attend regular daycare, that’s another credit.
While you can’t adjust your previous year’s income, you can look at reducing future taxable income through retirement savings such as RRSPs or RIFs, and charitable contributions, but keep a paper trail.
5. Will you file on time?
No matter how you file, do it on time – you’ll avoid a fee, and interest.
When a little help is needed
Despite your best efforts at planning deductions and keeping accurate records, sometimes you need a little help around tax time, and when that happens, it helps to know an easy, safe and secure option is just a mouse click or phone call away.
“Whether it’s an unexpected tax bill or other surprise expense, MyCanadaPayday.com, Canada’s licensed payday loan specialist, is here to help,” says Sundeep Thind. “With our simple online application and a helpful team of specialists happy to walk you through the process, you can get back on the road to achieving your financial goals in no time.”