Filing income taxes is an intricate process. For the same reason, it is not surprising for taxpayers to make mistakes while filing their income tax returns. You can also commit the same mistakes unless you carefully do your income tax preparation in Toronto. At times, the mistakes you may make when filing income tax returns can lead you to pay more taxes. In other words, you may not capitalize on the benefits if you make mistakes while filing your returns.
Further, you may face penalties or pay other fees while committing such mistakes. We are going to tell you about those mistakes to make sure you avoid making them while you prepare and file your income tax return.
Mistakes to Avoid with Income Tax Preparation
Here are the mistakes you should avoid when you prepare to file your income tax return:
Forgetting about Eligible Deductions or Credits:
Firstly, it is hard to know what deductions or credits you qualify for, in Toronto, with ever-changing tax rules. However, if you don’t figure out your eligible deductions or credits, you will unnecessarily pay your taxes. Besides, Canadians typically overlook the following credits and deductions when filing income tax returns:
- Non-refundable tax credit for the interest Canadians pay on student loans
- A tax deduction they are eligible for union or professional dues
- Tax deduction for work-related expenses
Nonetheless, you can hire a tax expert to file your returns to avoid committing the same mistakes. Further, if you cannot afford to hire a tax expert, you may consider using reliable tax software to file your income tax return without committing this mistake.
Claiming Expenses One Isn’t Eligible for:
Another mistake that Canadians make while filing their income tax return is that they claim ineligible expenses. Besides, a taxpayer who moves 40km closer to a new workplace can deduct a variety of moving costs. Transportation and storage plus travel expenses, to name a few. Nonetheless, some taxpayers misuse this eligibility and claim ineligible expenses, like household repairs, home staging, etc. As a result, taxpayers face problems because they claim expenses they aren’t eligible for.
Discarding Slips and Receipts:
Due to the popularity of online tax filing that doesn’t require taxpayers to send slips and receipts alongside their tax returns, they don’t properly manage the paperwork. Nonetheless, getting rid of slips and receipts can create problems for taxpayers. CRA can request taxpayers to see receipts of things like childcare expenses, charitable donations, etc. It can request taxpayers to confirm whether the claim they have made is legit or not.
Besides, individuals need to keep seven years’ worth of records because CRA only accepts receipts with the date of payment. Hence, it is important to keep your slips and receipts when you proceed with your income tax preparation in Toronto.
Misreporting Marital Status:
You may have a spouse you have been living with for at least 12 months. In addition, you may have a child, whether by birth or adoption; it puts you in a common-law relationship. In such a scenario, it is mandatory for you to declare your marital status on your tax return. Otherwise, you won’t claim benefits, such as GST/HST tax credit or Canada Child Benefit, with the filing of your return.
Overlooking the Transfer of Unused Tax Credits to Other Family Members:
You can transfer some of your tax credits to your spouse if they don’t have sufficient income or owe taxes. For instance, you can transfer unused $5000 tuition tax credit to your parent or grandparent. If you do so, it will help you enjoy greater tax savings.
Missing the Tax Deadline:
The tax deadline isn’t something you should miss, specifically if you run a business in Toronto. Filing your taxes late can make you suffer tax penalties and interest charges. Besides, it can delay benefit payments you qualify for when the government cannot access your eligibility for payments.
Not Realizing Taxable Benefits:
You may not realize taxable benefits while filing your income tax return. It had happened with taxpayers during the pandemic when they didn’t realize taxable benefits, like (CERB Canada Emergency Response Benefit). Thus, it is important you realize benefits that are taxable while you file your income tax return in Toronto.
Overlooking Mistakes, You Made Previously on Income Tax Return:
You may ignore mistakes you made previously on your income tax returns and file your return. However, you shouldn’t make the same mistakes again; if you want to make the most of your income tax return, you have to file and claim eligible refunds.
Further, you may hire a tax expert to properly file your income tax return and claim your refunds.
The following are mistakes you should avoid while you begin your income tax reparation in Toronto:
- Forgetting about Eligible Deductions or Credits
- Claiming Expenses One Isn’t Eligible for
- Discarding Slips and Receipts
- Misreporting Marital Status
- Overlooking the Transfer of Unused Tax Credits to Other Family Members
- Missing the Tax Deadline
- Not Realizing Taxable Benefits
- Overlooking Mistakes, You Made Previously on Income Tax Return