2012. The doomsday year? Not sure yet, but it is a leap year and a leap year creates tax timing issues. Like I said, doomsday?
Deadlines come earlier in leap years so don’t mess up. The final day for RRSP contributions for 2011 tax purposes is February 29 and NOT March 1. Also, T3 trust returns must be filed by March 30, not March 31.
Some people feel overwhelmed when it comes to tax preparation. If the forms and software aren’t intimidating enough, what about finding and organizing all the info needed for input?
Here’s a plan that might help.
Follow last year’s return. Or better yet, find the list you created of all those things input on last year’s return and use it as a checklist for this year.
Didn’t make one, then this is Step 1 for preparing for this year’s taxes. Make a list of all your inputs for reference for next year. If you have one, update it as you go along this year.
Step 2 – Create a yellow sheet, as I call it, for important notes and questions. Things to investigate or ascertain should be written down. There is too much detail during tax preparation to simply rely on your memory.
Step 3 – Enter all your personal information. Be accurate and complete. By the way, some personal changes require you to mail your return. Read the CRA forms or heed the instructions that will likely show up in the diagnostics if you are using software.
Step 4 – Fully open and lay all your slips flat. Check the name and remove slips that aren’t yours. Then set aside information clearly not needed for input. Organize your slips into two piles – incomes and expenses. Then group like items together such as all T4 income, T5 interest, etc, and all medical expenses, donations, etc.
Step 5 – Begin entering your information and tick the numbers as they are entered. When addition is required, use a calculator … and do it twice. Enter what you easily can identify and find 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. The same way one should write an exam!
Step 6 – For those items you don’t know where to input, read the slips because maybe they don’t have to be entered. The info on them may also direct you where to enter them. If you still can’t figure it out, Google it. Use the exact name on the slip as your subject line. If it doesn’t show up on your search engine, add CRA to the term. This procedure can be completed on the CRA website as well.
Step 7 – When you think you are done, double check to make sure everything has been answered and input. If using software, check the diagnostics and don’t override queries before fully investigating them. Unfortunately some software programs accept overrides and permit internet filing with errors or omissions, only to be rejected by CRA. A hassle and delay likely not desired. If you are using the traditional CRA paper forms, have a trusted person review your work.
And voila, 2011 taxes done … and before doomsday. Hmmm, maybe you should have waited?
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.