So you have completed your 2013 taxes. Congratulations on filing on time. Did you do it yourself? Have a friend or neighbour or family member do it for you. Or maybe someone who “does taxes” for others.
It’s amazing how some people feel that if they get a refund it must have been done right! Well, it might not have been done wrong, but maybe you left some money on the table!
Unfortunately the way our tax system works, you don`t know what you don`t know“
I’ll be the first to admit that if all you have is some T4s and other typical tax slips, there is normally not much value I can add. But there are times when you should have your taxes reviewed just to make sure.
I normally recommend that you have your taxes reviewed every three years by a professional like myself just to make sure you haven’t missed out on some tax credits or deductions. Provincial credits and pension splitting can only be adjusted back three years, so that’s why i recommend every few years.
My reviews of your past tax returns are free. If I don’t find anything, at least you have confirmation that the taxes were completed correctly. But most of the time I do find something that was missed. Not necessarily wrong. But Canada Revenue Agency isn’t going to tell you that you missed something (unless you forget to report income they know about; then they definitely let you know about it with a Notice of Reassessment months later.
Here’s a list of items I often find when reviewing past tax returns:
- RRSP contributions made during January / February. These receipts are often received in March, sometimes after taxes have been filed and then forgotten by next tax season
- Donations claimed every year if they are small should be used every few years so some of it exceeds $200 which gets a better credit.
- Seniors may not always get the pension income splitting correctly. This year I met some new clients and asked why they used the amount they did in the past. They thought it was “the correct amount”. I showed them what I recommended and saved them several hundred dollars for the 2013 taxes. I’m reviewing and adjusting the past three years to get them more money. I have new fans!
- Medical expenses are often incomplete. Items often forgotten include premiums for health and dental plans paid via pay-cheque, travel health insurance and other items out of pocket, including laser eye surgery. Tax payers that move from Winnipeg to the rural may not know about the medical travel they can claim.
- Child Care Expenses can include the lunch fees paid at the school (it’s for supervision).
- Unused Tuition transferred to parent / spouse / grandparent is sometimes not done quite right. And the Manitoba Tuition Rebate is not always claimed. I’ve done a few of these this year for new clients that didn’t understand how to claim it.
- Many are still not familiar with the Disability Tax Credit or the Manitoba Caregiver Tax Credit. I handed lots of these forms out this past tax season!
- Those living in senior assisted living and claiming the Disability Tax Credit often don`t know that you can claim a portion of the rent as a medical expense.
- The Education Credit can be missed when moving from rental to owned home or vice-versa.
There are many different situations that I recommend you seek professional help to have the income taxes done. The first one is when someone dies. Do not try to do this yourself. I have seen the CPP death benefit included incorrectly on the tax return of the deceased instead of the beneficiary or estate. All assets are considered sold on the date of death and I`ve seen many items missed because the child or executor didn`t know. And see me soon after someone passes away if they have RRSPs or RRIFs. We may want to have some of those paid out instead of transferred to a spouse.
When you sell an asset, get some help: disposition of shares, vacant land, farmland, rental property, cottage, or even your principle residence if you own more than one property. The capital gains calculation can get complicated. You don`t want to claim too much, but you don`t want to under-claim or not claim at all. That`s called Tax Evasion!
Of course the self employed should not do their own taxes. Fine if you want to do your own book keeping, but get another set of eyes on those figures and statements. If you are not claiming your income and expenses correctly you are likely to be audited by Canada Revenue Agency. You don’t want to be audited. Trust me on that one. I`ve met a few people at the start of an audit and let`s just say they wish they had sought professional help a while ago. It`s painful now when you see how much taxes are owed!
So if your taxes have been completed and filed, but not by someone who specializes in personal income taxes, ask me for a free review. It might be the best thing you do this year! It will at least let you have peace of mind knowing it`s been done correctly and completely.
A quick reminder that those of us who are self employed have until June 15 to file (actually June 16 because the 15th is a Sunday). Remember if we owe, the interest clock has started on May 1. We just do not get penalized if we file by June 16. The interest rate is 5%, not bad for a short term loan.
If you are not self employed, but are getting a refund, no worries, there are no penalties for filing now. If you think you will owe, come in as soon as possible. The penalty is 5% of what you owe, plus 1% each month, plus the interest. You`ve missed the deadline to avoid the initial penalty, but let`s get it filed ASAP. Even if you cannot pay CRA all at once, it`s best to get it filed soon, and then make arrangements for payments.
Anni Markmann is a tax professional and owner of Ste Anne Tax Service, working, living, and volunteering in our community. Contact Anni at 204-422-6631 or anni@steannetaxservice.ca or 36 Dawson Road in Ste Anne.