Do these 4 things now to make filing your taxes easier

“You really have to depend on your memory to get every single item included in your tax return that would have happened throughout the year,” says CPA Stefanie Ricchio (Shutterstock/GaudiLab)

Even if filing your tax return is straightforward with simple T-slips or a complex bundle of deductions and credits, a checklist can help you get your paperwork in order—whether you file it yourself or take it to a tax preparer.

Here’s how to organize everything efficiently, easing that filing process.

1) COLLECT PERSONAL INFORMATION

Gather (and update) all personal information for yourself (and your dependents), including your SINs, date of birth, address, marital status, and so on.

Look to last year’s notice of assessment to note any changes that have occurred including marital status, name change, address, and so on, as well as to establish any missing credits/deductions that can be carried over to this year including tuitions credits, moving expenses and capital cost allowance.

Remember that credits you are claiming that relate to other family members, such as tuition transfers and the Canada caregiver credit (CCC), require additional details including your dependent’s net income and your spouse’s or child’s completed return.

2) ESTABLISH INCOME SOURCES

Think about where and how you made money over the last year. Did you only work for one employer, with a single T4, or did your salary come from several sources, requiring multiple T4s? Don’t forget to include tips and gratuities you earned. If you were self-employed, you’ll need to add up the amounts you billed to clients or customers and report it.

If you’ve received government assistance in the form of employment insurance benefits (T4E), social assistance payments or workers’ compensation benefits (T5007), Universal Child care Benefits (RC62), old age security, CPP benefits and other pensions (T4A(OAS), T4A(P) or T4A), make sure you have those forms on hand. Check your CRA My Account, as the information from many of these forms are now sent digitally, and can also be downloaded into tax preparation software.

“You really have to depend on your memory to get every single item included in your tax return that would have happened throughout the year,” says Stefanie Ricchio, CPA with Balance the Five. “[It’s about] remembering that these payments were made, and…trying to keep track of everything that you should be claiming.” Penalties can apply if you fail to report income.

Other income you will need to report on your return can include interest, dividends and mutual funds distributions (T3, or T5), spousal support, money made from a rental property or the sale of investments (T5008) and real estate. Note that if you sold your principal residence, the sale must be reported even if it is tax-free. Also, if you have investments outside Canada with a cost greater than $100,000, you will have to report these investments on form T1135.

3) REVIEW CREDITS AND DEDUCTIONS

With so many credits and deductions available to Canadian taxpayers, figuring out what you can claim, while gathering the receipts and documents as proof, can be overwhelming. [See Know the tax changes that will affect you and your business]

Start by thinking about what you may be eligible for. Did you pay for daycare? Are you looking after a dependent relative who is disabled? Did you move for employment reasons? Did you, or a family member, attend school? The CCC, the disability tax credit, and tuition credit are just a few examples of how you can lessen the tax you owe or even get money back.

“Whatever you are reporting in your income tax return, you need to have the back up to prove it,” says Ricchio. “[The CRA] looks for significant changes from one year to the next…You want to make sure that you have all that back up behind you.”

Pull together receipts for all of these, as well as other payments you may have made including charitable or political donations, professional or union dues, medical expenses, RRSP contributions and support paid to a child or spouse.

4) INCLUDE SPECIFIC CLAIMS

If you are self-employed, now’s the time to go back to that drawer full of receipts and figure out the expenses it took to run the business and claim them accordingly.

Stan Swartz, CPA with Infomoney Solutions Inc., reminds those running a business out of their home to make sure they are accounting for office space correctly (i.e. for a dedicated space based pro-rata on the total square footage of your home) as only a portion of home expenses are deductible. Restrictions also can apply if there is another business location.

“There’s a misunderstanding about how much they can deduct for that,” he says. “A lot of people think they are entitled to more than they really are.”

If you have a rental property, Swartz reminds, don’t forget expenses incurred on income properties including services provided (landscape work, snow clearance), utilities, property taxes, insurance and travel (automobile/gas) incurred when dealing with issues that crop up. If you borrowed money specifically to buy the property, you can also deduct the mortgage interest. Finally, you may also be able to claim tax depreciation called capital cost allowance on the cost of the property and any equipment or other capital property related to the property.

Finally, some employees may be able to claim employment expenses you paid for and you weren’t reimbursed by your employer. The range of deductible amounts are limited and additional conditions do apply.

GET ORGANIZED WITH YOUR TAXES

From categorizing all your paperwork to knowing your rights if you get audited, these tips from CPAs will help you successfully prepare for filing your taxes.