While some people are enthusiastic and very organized when filing a tax return, others may feel overwhelmed by the process and afraid of making mistakes.
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According to the Canada Revenue Agency, these are the five most common errors when filing income.
1. Not reporting all of your income
It is important that you declare all of your income. Some sources of income that you may not think about need to be reported on your tax return. Failure to report income may result in penalties. For example:
-Tips and gratuities;
– Income from the sale of goods or services if you run a business (e.g. part-time jobs);
-Revenue from the platform economy (i.e. revenue enabled by the use of technologies such as websites or mobile applications);
-Income from online commercial activities;
-Foreign income.
2. Not keeping your personal information up to date
If your personal information such as address, telephone number, dependent children or marital status has changed recently, you must inform the Canada Revenue Agency and Revenu Québec. You can do this through your online file.
3. Ask about personal expenses
Taxpayers may forget to claim deductions, credits and expenses. If you meet the requirements, they can reduce the amount of tax you have to pay. We are talking in particular about medical costs, tuition fees, child credits, etc.
Please note that not all expenses can be claimed. Here are examples of expenses that cannot be claimed:
-Funeral expenses and wedding expenses;
-Loan to a family member;
– a loss from the sale (house or car).
4. Enter the amount of your partial payment on your paper return
If you file your tax return on paper: If you pay only a portion of the balance due, do not include the amount paid on your paper return. The payment you send with your return will be considered payment of your remaining balance due. It will be listed as a “production payment” on your tax return.
5. Lack of justification for income and expenses
The CRA strongly recommends keeping accounting records and keeping all financial documents organized to “ensure the accuracy of your records.” In the event of a tax audit, accurate documentation is required.
This applies in particular to:
-T4 briefs;
-Account statements;
-earnings statements from other sources;
-received from suppliers of goods or services;
– Receipts for all deductions and credits claimed.