Is it too soon to prepare your personal tax return?
Despite the tax filing deadline being about 60 days away, it’s likely unwise for most people to prepare and file their tax return just yet.
Canada Revenue Agency (CRA), although requiring a February 28 distribution date for most tax information slips such as T4 slips from employers and T5 slips from investment firms, does extend to March 31 the distribution of some tax slips to taxpayers.
In particular the providers of T3 and T5013 slips, both reporting investment activity, are given an extra month to the end of March to arrive in the taxpayer’s hand. Also, if you have made an RRSP contribution near the March 1 deadline you will have to await the tax slip’s arrival, something easily forgotten by those who make regular RRSP auto deposits throughout the year.
This year CRA is allowing the electronic distribution of T4 employment tax slips to employees whether or not consent is given to the employer. However, only employers with secure internal email service may use this distribution system.
A word to the wise, distribution of tax slips via email may be missed since people won’t necessarily be looking for them. Not to mention the tendency to delete emails because of the caution associated with spam and scam emails. It may be best for employers to communicate with employees before emailing T4 slips.
While waiting for all your tax slips to be in hand, there are some things you should do before tax preparation whether using a professional tax preparation service or do-it-yourself software or even paper forms. And yes, the federal government is still permitting paper filed tax returns.
A visit to the CRA website is time well spent. Review CRA’s tax tips and changes so you don’t mess up or miss new opportunities. If you are self preparing, become familiar with this year’s tax schedules because chances are they have changed, and new ones added.
Once all tax information is gathered, and this may include more than T slips, sorting through everything not only reduces the chance of errors and omissions, but presenting organized and complete information when using a tax prep service may actually lower your preparation fee.
Speaking of fees, when using a tax prep service it’s fair to ask how the fee structure works. What constitutes “extras”? What happens with a CRA review, and how will the preparer help you, and at what cost? Is the preparer available year-round?
The last filing date is Monday, April 30. Filing late with taxes payable creates an immediate interest charge. Additionally, CRA has the authority to impose a penalty of up to 50% of taxes payable.
Refund coming? It’s your money so be sure to file. Last count, there is over $700,000,000 of unclaimed refunds sitting with CRA. And yes, that’s almost a trillion dollars.
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.