Even if our tax situation is relatively simple, filing your tax return alone has some pitfalls.
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Of course, using tax software can make our job easier, but you still have to do your part of the job.
Here’s how to avoid four common mistakes.
1. Trust the autofill option with your eyes closed
In the tax software, you can select the autofill option. However, Alexandre Hunault, tax expert at the FDP, recommends checking the data carefully.
“Taxpayers feel safe because the information comes directly from the tax authorities. But if your employer is late sending your T4s to the government, then the earned income information may not be accurate,” he says.
Solution: Validate numbers yourself, documents available.
“If your situation is stable from year to year, you can also take your statement from the previous year and compare it line by line with that of the current year,” advises Alexandre Hunault.
If there are differences between the two, check it out. If in doubt, you can check the meaning of each line on the Canada Revenue Agency (CRA) and Revenu Québec websites.
2. Forgetting to include expenses
Eligible expenses reduce the tax burden.
Forgot the big ones? Those related to healthcare costs.
However, to be worthwhile, these expenses must reach the minimum limit of 3% of net income, so none of them can be skipped. Note that the amounts paid for private insurance are included, as well as the contribution to the Régie de l’assurance maladie du Québec.
“This also includes the portion of medication that is not covered by your private insurance or the RAMQ,” specifies Alexandre Hunault.
In this regard, don’t forget to request an annual report of your medication purchases in order to have all amounts at hand.
The tax expert adds that many expenses fall into this category, even parking costs for a hospital appointment!
Full details can be found on the CRA and Revenu Québec websites.
3. Omit unused fees or charges
It happens that certain fees are not fully used in the annual income tax return for reasons of tax maximization.
The same goes for RRSP posts.
These unused amounts are listed in the previous year’s tax return, so check it to make sure you haven’t forgotten anything.
For example, unclaimed tuition fees can be carried over indefinitely if you don’t claim them.
“That’s also why you should make sure today that you have access to your file on the CRA and Revenu Québec sites so you can check your opinion there if necessary. Be careful, the CRA sends an access code by post, you have to plan about ten days for that,” says Alexandre Hunault.
4. Optimize your statement with that of your spouse
If you have a spouse, it may be more beneficial to transfer certain fees or expenses to them, or vice versa.
“For example, the person with the lowest income should declare childcare costs in their declaration in order to be able to maximize this loan,” says Alexandre Hunault. The same applies to medical expenses.
Be careful, if your child was enrolled in day camp last summer you may be able to claim part of the bill towards childcare costs.
- If you’ve moved close to your place of work or college, you can include these costs in the moving expenses category. However, you must have driven at least 40 kilometers. This also includes costs for storage, travel, temporary living expenses (board and lodging), termination of the tenancy, costs for disconnecting and connecting public utilities, etc.
- Do your children take part in sporting, cultural or artistic activities? This gives you access to a child activity tax credit.
- The tax credit for buying a primary home was doubled this year at both the federal and state levels. You can claim up to $10,000 for a qualifying home purchased in 2022 or up to $5,000 for a qualifying purchase made in 2021 from either level of government.
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