Mar 23, 2021
Written by Betty Anne Flynn
Tax season is upon us, and with just over a month until the tax filing deadline, here are some helpful hints.
1) Tax Receipts
Put all your tax receipts in one file. Most T-slips for income will be mailed to you in the first 2 months of 2021, for the 2020 year. However, receipts for such claims as donations and medical are accumulated throughout the tax year and may be time consuming to duplicate if misplaced. Staying organized will ensure that you are not missing any receipts and will ensure a quick and smooth process when it comes time to prepare your tax return.
2) Home Office Expenses for Employees (for 2020 due to COVID-19)
Individuals who were required to worked from home during 2020 due to COVID, and who meet the eligible criteria, may be able to claim “workspace in the home expenses”. There is a flat rate method and there is a detailed method. The following link provides a great overview of both methods:
Canada Revenue Agency Website.
3) Notice of Assessment
Your Notice of Assessment from the previous year contains valuable information to assist with your tax filing. Carry forward amounts appear on the assessment along with RRSP deduction limits. Not claiming these carry forward amounts could result in lost tax savings.
4) Pension Income Splitting
Pension income splitting could save you a huge amount in income tax. You can split up to 50% of your pension income with your spouse or common-law partner, and this option is available to you on your tax return. You can also split up to 50% of your RRIF income for those 65 and over. It’s best to prepare both spouse’s tax returns at the same time and your tax program or tax preparer will calculate the optimum amount to transfer between spouses.
The tax filing deadline in Canada is April 30th, 2021. For self-employed business owners, the deadline is June 15th, 2021 however, if you owe income tax, the deadline for payment is April 30th,2021. If you are late in filing your taxes, or you don’t pay the outstanding amount by the deadline, you could be faced with penalties and interest.
6) Tax Software
There are many great tax preparation programs available and you can find a list of these on the CRA website. These programs are user friendly in that they ask you questions to prompt you to fill in the correct forms, or skip over unnecessary forms. These programs can be helpful in that they may remind you of income or deductions you may have forgotten about, or they may remind you of claims for which you were not aware.
We hope the above tips have been helpful. There are many more topics on this subject that can be found on the CRA website . This is a great source in answering questions you may have about income taxes.