Keeping Records for your Taxes
Before we review the records you need to keep for Canada Revenue Agency (CRA), here are a couple of new non-refundable tax credits for the 2011 tax year:
The Children’s Art Tax Credit is new and covers a lot of what the Children’s Fitness Tax Credit doesn’t: music lessons, cadets or scouts, any arts programs, etc; up to $500 per child. Find those receipts now!
Volunteer Fire Fighters Tax Credit – claim $3,000 if you had more than 200 hours of service in 2011 (including responding to calls, training, and meetings). A certification from a fire chief may be requested by CRA to verify the number of hours of eligible volunteer firefighter services you performed for the department. (Fire Chiefs: get this information ready and keep track of the hours of your volunteers!) The credit of $3,000 could lower your taxes payable by $450.
As a volunteer firefighter, you may be eligible for an income exemption of up to $1,000 if you received a payment for carrying out volunteer firefighter duties. If you choose to claim this exemption, you will not be eligible for the new Volunteer Firefighter Tax Credit. When you have your taxes done, figure out which one is better for you!
Now that you are up to date with what’s new, let’s get to records you need to keep for your taxes.
Most taxpayers don’t need to keep a lot of paperwork; most people get their required tax slips from various employers, pensions, and banks and credit unions.
Medical expenses are the most common type of records taxpayers need to be aware of. In order to claim the Medical Expense Credit (remember it’s non-refundable and doesn’t help those who are not paying federal or provincial taxes), you need receipts to back up your claim.
The normal items are medical receipts like prescriptions, dental, chiropractor and the like. The ones that you need to keep good records of is the medical travel. You need to keep track of appointments that were more than 40km away from your home and you couldn’t get that service closer.
Keep your 2011 calendar where you record everything and highlight the medical appointments you had. If you have already discarded your calendar, you can contact the medical offices for a list of appointments you had. Or you can contact Manitoba Health and they will send out a list of appointments they have on record (that’s how they keep track of all the healthcare services they are paying for!).
Keep your parking receipts, or if you didn’t get a receipt, make a note of how much you paid and the date and location.
If you paid someone to drive for you (and the doctor gives you a note requiring it), you can claim what you paid them (of course they need to claim the income).
If you travel more than 80km you can claim one meal (actual receipt or simplified at $17). And you can claim accommodations if you stay in a hotel.
Also remember to claim Health Care Premiums you paid via your employer or pension. Check your paystub for the end of December to see how much you paid for the year. And remember any Travel Health Insurance you paid for. You can claim all these premiums you paid.
Charities normally send out a receipt and that is all you need. But some clients recently have been asked by CRA for proof of payment for some larger donations. So if a donation is $500 or more, you may want to keep the cancelled cheque or credit card statement too in case CRA asks for it.
Other receipts you need to keep on file are for Child Care expenses, employment expenses (if you are eligible), Children’s Fitness expenses (up to $500 per child), moving expenses (if you moved more than 40km to be closer to work, or have a new job), Public Transit passes and receipts, Adoption expenses, Tradesperson’s Tools, Student Loan Interest, Tuition paid (T2202 issued by the education institutions).
If you purchased something that will be subject to capital gains in the future, you better keep that info too: Land, Rental Property, Shares or Mutual Funds (not in a registered account). You also need to keep track of items that were given to you to as a gift or because of an inheritance. You better have it on paper what it was worth at the time you received it.
Do you pay for part of your disability insurance through work? Then keep your pay stubs every year (the last one of the year often has the total). If you should become disabled and claim the taxable disability income, you get to deduct what you paid for it over the years. Some employers can figure this out for you, but I had one client we revised some previous tax returns and saved her a lot of money, but only because she had kept her paystubs for many years! It can be worth keeping some of these records! I always recommend keeping at least the final paystub of the year for these reasons.
Are you or have you been considered Common-Law? There are times you may need to prove it. So I recommend always keeping your December statements (bank, credit card, etc) so you always have proof of where you lived as at December every year.
If you have any questions about these or other tax items, please feel free to contact me!
Canada Revenue Agency opens their personal income tax e-filing system on February 13. I look forward to seeing many of you, my faithful readers, soon!
Anni Markmann is a financial advisor and tax professional working, living, and volunteering in our community. Contact her at 422-6631 or firstname.lastname@example.org or the new location at 36 Dawson Road in Ste Anne