It’s time – time for tax preparation. Ouch.
Here’s a simple plan to reduce the pain I recommend to clients.
Find a copy of last year’s return and follow it. Unless things have changed a tonne since last year, this is a great reference tool. Even if things have changed, last year’s will prompt thoughts.
Make a scratch sheet of things that have to be investigated or ascertained. Forgetting can be very costly so don’t rely on your memory as you go along.
Choose paper forms, electronic software or professional preparer.
If you do choose the professional preparer, organize your information as suggested below, find a preparation service you can depend upon (year round by the way because you never know when Canada Revenue Agency (CRA) may call) … and then enjoy your free time.
Otherwise, the do-it-yourself route requires you to be familiar with the new tax credits from the last few years and all the CRA tax forms before you get started.
Ready to go? No time for stage fright. Begin by entering all your personal information. Don’t leave this input for last. Even missing something this basic could mess up your filing. Be accurate and complete.
Fully open and lay all your slips flat. Watch for duplicates. Check the name and make sure the slip has your name on it. Set aside information clearly not needed for input. Group like items together such as all T4 income, T5 interest, etc, and all medical expenses, donations, etc.
Enter what you easily can identify on the forms. Surprisingly those items you aren’t sure about or aren’t sure where to enter will become apparent as you move along with the input of familiar items. Tick the numbers on the slips as they are input. Use a calculator when calculations are needed.
For those items you don’t know where to input, read the slips because they might not have to be entered. The info on them may also direct you where to enter them. If you still can’t figure it out, use the CRA website, or even Google it.
Double check to make sure everything has been answered and input, and check the diagnostics if using software. Unfortunately some programs accept overrides and permit internet filing with errors or omissions on the return, only to be rejected by CRA – a hassle likely not desired. It’s not wise to override tax program diagnostic warnings before fully investigating them.
Remember the last filing date is Wednesday, April 30, and late filing with taxes payable not only costs you interest charges, but may trigger a penalty of up to 50% of the taxes payable. And if you have a refund, why not file on time? Or sooner!