It is time to take out financial and tax records and fill out tax forms. To maximize tax savings, it is important to avoid the most common mistakes that occur while filing income tax returns. Tax returns are complex, and mistakes can lead to a higher tax burden or a revocation of tax benefits.
Sometimes a mistake on a tax return can result in a penalty or other fees. Some of the mistakes that you might make while filing your tax return or how to correct one are listed below. Continue reading!
Forgetting about allowable deductions or credits
Tax deductions and credits are often overlooked, especially when the government changes tax rules. To ensure that you are eligible for any deductions and credits, it is essential to consult with a Toronto accountant and an experienced member named Shayan Rashid.
Tax credits and deductions that are often overlooked include non-refundable tax credits for interest paid on student loans, tax deductions for union or professional dues, non-refundable home buyer’s tax credits, and tax deductions for work-related expenses. Tax software can help to determine if you are eligible for any of these deductions and credits.
Claim Unallowable Expenses
Taxpayers who move a few kilometres closer to a new place of work or to study full-time at a post-secondary program can deduct a variety of moving expenses. Still, some include ineligible expenses such as repairs or the cost of mail forwarding.
Some students also claim the student loan tax credit on interest fees paid on personal loans, student credit or foreign student loans. Schedule a free consultation with our best accountant Shayan Rashid, to find the best accounting firm in Toronto.
Remove Slips and Receipts
Online tax filing is becoming more popular, but taxpayers are not required to send in all slips and receipts. CRA often requests receipts for certain entries, and individuals must keep seven year’s worth of records and only accept receipts that include the date of payment. Failure to provide these documents will result in a denied claim.
Being unaware that some benefits are taxable
Emergency relief from the government during the pandemic can be taxable as income tax was not deducted at the source. Benefits received need to be declared in the income tax return as they are taxable.
Leaving out all of your income
The most common tax return error is failing to include all of your revenue. To prevent this, it is important to make sure all paperwork is organized before filing. If you fail to include something, you can submit an amended return as soon as possible. Indicate that it is an amended return and include the missing information. Your return will then be processed, and the CRA will proceed accordingly.
Not filing electronically
If you haven’t filed your taxes online, you’re losing out on a lot of advantages. One benefit is that it is much quicker and simpler than paper filing. More significantly, even though it is more precise to obtain. You are less likely to make mistakes that could cause a delay in receiving your return because the CRA processes electronic filings considerably faster and more effectively than paper ones.
Thus the above-mentioned are tips to avoid the mistake on your Tax Return in Canada. Sign your tax return and keep a copy with proof of filing. This helps protect you from IRS claims that you filed late or not at all. Additionally, past tax returns will come in handy when filing future returns or needing to file an amended return.