Tips from CPAs to help get organized before filing your taxes

Being organized is crucial. If you are not sure what paperwork to provide, speak to your accountant in advance. (Shutterstock/Rawpixel.com)

Planning in advance helps simplify the tax-filing process, while speeding up that anticipated refund or reducing the chances of being red flagged (i.e. audited).

Here are six tips from CPAs to help you get things in order before the April 30 deadline. 

1. DO A REVIEW

Check out last year’s notice of assessment, noting any big life changes that have occurred since then—including a change in marital status, legal name, your address or employer—and find out how they may impact your tax return. If you sold your principal residence, don’t forget that you must report the sale, even if it is not taxable. 

Missing information is a big issue, particularly for individuals who self file, says Stefanie Ricchio, CPA with Balance the Five. If you’re filing through a tax preparer, make sure they are aware of these changes. 

“You really have to be prepared to go in with the full information,” says Ricchio. “A notice of assessment doesn’t tell me if your marital status has changed, or if you’ve become a widow. Nothing of that sense really comes forward.”   

2. CHECK WHAT’S MISSING

Did you forget deductions or credits last year that you can carry over, or include, on this year’s tax return? 

Medical expenses, disability tax credits (DTC), the Canadian caregiver credit (CCC), union dues or licensing fees, tuition credits and moving expenses are examples of deductions and credits Canadians often miss out on. Collect, and pass along, any relevant receipts that can be utilized towards those for which you qualify.

“Those are major items that go a long way in saving you tax dollars,” says Stan Swartz, CPA with Infomoney Solutions Inc. “Make sure you note all those things that could affect the bottom line of your tax return.”

This tax year, there are some changes to consider including the Tax on Split Income (TOSI), and the new Climate Action Incentive rebate for eligible provinces: New Brunswick, Ontario, Manitoba and Saskatchewan. 

3. GET ORGANIZED

There’s nothing worse for an accountant than a client showing up with a bag full of receipts and envelopes to weed through, says Swartz. If you are not sure what to provide, speak to your accountant in advance, he adds. 

“The more information that you give them, the more efficient the preparation process and you’ll get better results,” says Swartz. 

Ricchio also reminds taxpayers to ensure they have all the paperwork in hand. These days, documents are received both digitally and in hard copy. If something is missing, check any online accounts (including the CRA My Account website if you’ve received employment insurance) and/or follow up with employers, organizations or institutions responsible for distributing what may be missing.   

“Think about what is the best organizational method to make sure that you have everything,” she says. “That organization becomes absolutely critical because a tax preparer will only be able to do what they are aware of.”

4. CATEGORIZE INFORMATION

If running your own business, sort through your paperwork, adding up relevant receipts and sorting them into categories such as expenses, cost of sales, HST collected and paid out, and so on. Input the information into a spreadsheet, or if you aren’t that tech-savvy, document it clearly on paper, Swartz suggests.  You will also need to collect these details if you are earning rental income or claiming expenses as an employee. 

“Summarize it for the accountant,” he says. “The more information that you give them, the more efficient the preparation process—and you’ll get better results.” 

A tip for next year, suggests Riccio: begin collecting any tax-related paperwork, receipts, and so on as it comes in, categorizing and storing it in one secure location. That way you are steps head when next February rolls around. 

“Having a centralized location for your documents is key,” she says. “That organization becomes absolutely critical because a tax preparer will only be able to do what they are aware of. Without them seeing something, or you remembering there was a transaction, there’s no way that it’s ever going to end up in your tax return.”

5. GET EDUCATED

Swartz believes tax season is the perfect time to educate yourself on what goes into filing your taxes, whether you’re filing yourself, or hiring a professional.  Get to know how your income is calculated, what credits and deductions you are eligible for and how the numbers add up to a refund or a bill. 

“The most important thing is to learn what goes into the preparation of your tax return yourself,” says Swartz. 

If you’ve hired a tax preparer, he adds “go through the tax return with them at the end” once its completed and ask for an explanation.

Swartz also recommends signing up online for a CRA My Account to see your tax return history and all your information on file, ensuring that it is accurate and up to date.

6. TAKE RESPONSIBILITY 

Ricchio takes education a step further, adding that ownership of your taxes is key. This starts with accepting that filing is a legal obligation, despite that it may seem like an inconvenience. Understand that there is only so much an accountant can do, when adhering to the Income Tax Act, to boost your return or reduce what you owe, she says. Accountants are there to help and take the pressure off but in the end the responsibility falls on the tax payer once their taxes are filed, she adds. 

“This is where that accountability and stewardship comes into play,” Ricchio says. “Not filing your taxes is never the answer. For some people, it’s because of complexity…[but] it’s amazing to see how many people are nonchalant about filing their tax returns…for those easier cases it’s a disservice because you are potentially missing out on benefits.” 

KNOW YOUR RIGHTS

Lastly, Swartz adds, other than making sure you file on time, if you do come up against a CRA inquiry, look to the Taxpayer Bill of Rights to ensure your being dealt with fairly. Work with a tax professional if the inquiry goes beyond asking basic questions or requesting missing documentation

“That’s the starting point with anybody who thinks they have a problem with CRA,” he says. “That’s something most people aren’t aware of. You’ve got to know your rights as a taxpayer.” 

GET HELP WITH YOUR TAXES

Find a free local tax clinic in your area, through the CRA’s Community Volunteer Income tax program. As a CPA, you can donate your time and professional expertise to these clinics and help vulnerable Canadians prepare and file their returns.