Taxes can be overwhelming for many Canadians, especially with all the deductions, credits, and deadlines. Even small mistakes on a tax return can cost you penalties, delays, or audits. Consult with a reputable tax accountant Ottawa to know some of the common mistakes and how to avoid them. It can make tax season less stressful and smoother. Here are some of the common top tax filing errors Canadians make and how to get around them.
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1. Missing the Deadline
One of the most common mistakes is simply missing the April 30 tax deadline. If you owe money, you’ll get hit with a late filing penalty. For self-employed Canadians, the filing deadline is June 15 but any outstanding taxes are due April 30. If you miss this deadline, you’ll be charged interest and penalty on unpaid taxes.
How to Avoid It: Put the tax deadlines on your calendar, set reminders and start preparing your return early. If you know you can’t file by the deadline, make an estimated payment to minimize interest on potential outstanding balances.
2. Not Reporting All Income
Another common mistake is not reporting all sources of income. Canadians are required to report not only their primary employment income but also any other income from freelance work, investments, rental properties, or foreign income. Leaving these out can result in penalties and CRA scrutiny.
How to Avoid It: Keep a list of all income sources throughout the year, including part-time jobs, side businesses and investment accounts. If in doubt, report the income and ask a tax accountant Calgary if you need clarification.
3. Not Claiming Tax Credits and Deductions
Canada has many credits and deductions that can reduce your tax liability, including the Canada Caregiver Credit, tuition credit and medical expense deductions. But many Canadians miss out on these by not claiming eligible expenses or misunderstanding the eligibility rules.
How to Avoid It: Research tax credits and deductions applicable to you. Use CRA resources to check eligibility and consult with a tax professional to get the most benefit. Tracking expenses like medical bills, charitable donations, and child-care costs throughout the year will make this process easier at tax time.
4. Wrong Banking Info
Incorrect banking info is a common mistake that can delay your tax refund or payment. If your direct deposit info is outdated or incorrect, the CRA can’t process your refund.
How to Avoid It: Check your bank info is correct and up-to-date before you file. If you change banks or update your account info, let the CRA know through their online portal or by contacting them directly.
5. Claiming Ineligible Dependents or Filing as Single
Claiming dependents or filing the wrong marital status can impact tax benefits and get your return flagged for review. This is especially common for separated or divorced individuals or those in common-law relationships. Filing the wrong status can result in overpayment or underpayment of taxes.
How to Avoid It: Make sure you know what the CRA defines as a “dependent” and confirm your relationship status for tax purposes. If your family or relationship status changes, let the CRA know right away to avoid confusion.
6. Using Old or Wrong Forms
Filing with old forms or the wrong forms is another mistake to avoid. Every year the CRA updates or adds new forms for various credits and deductions and if you don’t use the right ones your return will be delayed or rejected.
How to Avoid It: Get the latest forms from the CRA’s website or use certified tax software that updates forms for the current tax year. This simple step will prevent filing issues.
7. Not Getting Help When You Need It
Finally, many Canadians file their taxes on their own even when their situation is complex. While self-filing is convenient and affordable, mistakes in complex returns can cost more than a professional fee.
How to Avoid It: If you have a complex situation, such as multiple income streams, investments, or dependents, consider getting a tax accountant. An expert can help you identify all eligible credits, deductions and ensure compliance and reduce the risk of audit.
Conclusion
Now you know the common mistakes and how to avoid them. Stay organized, check for credits and deductions, update your info and get help when you need it and you’ll file on time and accurately.
