Tax season can create a lot of stress, even for people who pay professionals to file taxes for them. Whether you plan to file taxes yourself or hire a professional, you need to know what you can do to make the process easier.
I suggests that everyone follow these four things you should do, before you prepare your taxes. These steps should help you save time, avoid mistakes, and lower the stress that so many people experience during this time of the year.
#1: Gather Your Tax Information Slips Into One File
Your employer should send you your tax information slips shortly after the beginning of the year. If you have more than one employer, then you should receive a slip from each. Put them all in the same file so you can access them easily without losing important information.
You might also get tax information slips from your bank, investment broker, or other businesses that have helped you earn money through interest or investments.
You will need these tax information slips to determine how much taxable income you earned last year. They are some of the most important documents for filing taxes. Without them, you can’t even start preparing your taxes for the Canada Revenue Agency (CRA).
Some tax information slips that you might receive include:
- T4 for regular income, including tips, bonuses, and salaries
- T4A for a variety of income types, including research grants, self-employment commissions, and superannuation income
- T4A(OAS) for Old Age Security income
- T4A(P) for pension plans
- T4E for Employment Insurance
- T4RIF for money in your registered retirement income fund (RRIF)
- T4RSP for money in registered retirement savings plans (RRSP)
- T3 for trusts and mutual funds
- T5 for investment income
Depending on your age and financial plans, you may not have all of these information slips. That’s ok. Just make sure you have copies of those that apply to you.
Keeping them in the same folder will make it much easier when you prepare your taxes.
#2: Gather Receipts for Deductions
If you have any deductions, then you need receipts that show the amount you paid for deductible expenses and when you purchased them.
Deductions can significantly lower the amount of money you pay the CRA. It’s best to keep receipts in a folder throughout the year. That way, you don’t have to hunt for them before filling out tax forms.
If you haven’t kept them organised, then you can at least gather them now so that you have them handy.
#3: Make Sure the CRA Has Your Current Address
You need to keep your address updated with the CRA. An old address could make it difficult for you to file your taxes accurately. Perhaps more importantly, it could delay your income tax refund.
There are four ways to change your address with the CRA.
- Online: change your address at NETFILE
- Phone: call the CRA at 1-800-959-8281
- Address Change Request: print a copy of the RC325 Address Change Request Form, fill it out, and mail it to your area’s tax centre
- Mail or Fax: send a letter or fax to the CRA. The letter should include your social security number, signature, new and old addresses, and the date you mover or will move
#4: Get an Income Tax Package for Your Province
The CRA stopped sending automatic tax packages in 2013 to reduce paper waste. If you plan to file your taxes online, then you will get a package with your tax software.
If you plan to file your taxes via the mail ,then you can get your tax package by:
- printing it from the CRA website
- ordering it from a CRA centre
- calling the CRA
- picking up a copy from a postal outlet or Service Canada office
Tax packages can differ by province. Make sure you have a copy for your area.
Taking these steps will make it easier for typical Canadians to file their taxes correctly. Taxes, however, can differ from person to person. If you have questions about filing your taxes, contact a professional.
If you have any problems with back taxes or paying last year’s taxes, then you may need help from a lawyer experienced in tax law. You can always rely on commercial and corporate tax lawyers to help you communicate with the CRA so that you can avoid excessive penalties.
Everyone gets a little stressed during tax season. Taking the proper precautions should make it easier for you to file your taxes and get your refund as soon as possible.
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