Over the past few weeks you’ve likely been receiving all those annoying tax slips in your mailbox or inbox. If you’re like me, you’re probably still procrastinating over the whole actually doing your taxes part though. Luckily you’ve still got time. The deadline to have your taxes filed in Canada is April 30th, giving us a couple of extra weeks over our US counterparts. Filing my taxes is not my favourite thing in the world. Honestly, I’m not sure why. I always put it off and then when I do it I’m pleasantly surprised how little time it takes.
My return is simple. I work one salaried job that gets me a T4 and then have RRSP contributions to factor in. All my investments are either in my RRSP or TFSA which means no slips for investment income. This year I’m planning to include my blog expenses. I’ve never done that before because they were nominal and I didn’t monetize the site. I still don’t earn much, but it’s enough for me to justify using the expenses. That plus increased RRSP contributions mean hello tax refund! More like hello neutral tax return but whatevs. Not owing (hopefully) is a win.
Is a Refund a Good Thing?
If we want to get all technical then no, technically a refund is not such a great thing. It’s that whole ‘interest-free loan’ thing you may have heard people mention. Getting a refund means you gave the government too much money throughout the year and they are now paying you back. With no interest. On the flip side, if you owe money on your taxes, then they gave you an interest-free loan over the year.
But let’s be honest. What feels better; getting a refund or owing money? Refund, obviously. If you’re getting money back, then don’t feel bad lavishing in the joy of the windfall. I know I will be!
Should You File Your Own Taxes
If you have a reasonably simple tax return, then you should absolutely file your own return. It’s quick and easy to complete, and you’ll save a lot of money DIYing it. If you are dealing with a more complicated situation such as an estate return or self-employed income, then a good accountant can be worth their weight in gold. You want to ensure you’re not only filing correctly but maximizing all the credits and deductions that may be available to you.
A quick note on joint tax returns. They aren’t actually a thing in Canda. Unlike in the US, here you have to file your tax return individually. If you are married or common-law, you will indicate that in your return. Some tax credits and deductions are based on household income, so relationship status is important. Tax fraud isn’t exactly something you want on your record. Depending on what service you use, you may be able to file your returns at the same time which will simplify the process, but they still count as individual returns. If you don’t go that route and keep things completely separate, you will still need your spouse’s full name, birth date, SIN and annual income.
When to File
You have to have your taxes filed by April 30th, but you can start filing as soon as you have all your tax slips. That’s kind of the catch. You may have received slips as early as January, but the deadline for sending out most tax slips isn’t until the end of February. Unless you are certain you’ve got nothing left to come then it’s not a bad idea to wait until at least mid-March to file. You’ll save yourself the hassle of filing an amendment if an unexpected slip shows up in your mailbox.
Tax slips generated from investments tend to be the latecomers. If you make an RRSP contribution on deadline day (March 1st) it will likely take at least a week for that receipt to arrive. And if you invest in mutual funds, T3 slips, which report income or capital gains earned by mutual fund trusts, aren’t required to be mailed out until the end of March. From my experience, mutual fund companies rarely wait that long but they can. It’s an annoying system.
You Can File for FREE, Yes Free!
Technically you can still file your taxes the old school way by filling out the forms by hand and mailing them to CRA. We’re just going to pretend that’s not really a thing though. You’re here reading a blog post on the internet, so I’m going to assume you’ll be online filing. Canadians filed almost 30 million tax returns last year, and over 85% of them were done online.
NETFILE is the electronic system that lets you complete and submit your tax return electronically using certain CRA approved products. This includes software you’ve likely heard of like TurboTax, H&R Block, SimpleTax, etc. Each of these programs has a free version you can use, or you can upgrade to premium options depending on your needs. Again, if your return is simple, then you shouldn’t have a problem with free software.
I’ve used TurboTax Canada for years and have always found it straightforward and user-friendly. It walks you through a bunch of questions to determine your situation, and then you input the information on your tax slips. You can even have your tax slips downloaded directly from CRA. There are detailed descriptions to help you figure everything out and support available if you need more information.
3 Tips To Simplify Your Taxes
- Be Organized – Before you get started, gather all your tax slips and receipts, your return from last year, and log in to your CRA My Account. If you aren’t set-up for My Account then I suggest doing that first. It used to be a hassle, but now you can use your online banking to sign in. It has helpful information like old returns, TFSA and RRSP contribution room, home buyer’s plan payback amounts, etc. Alternatively, you can have a copy of your notice of assessment handy.
- Don’t Overthink It – If filing your taxes feels overwhelming then consider hiring someone to do it for you. It shouldn’t be that hard, and if it is, that’s a good sign you’re dealing with a more complicated situation that could use a pro. You want to ensure you’re getting all the deductions possible but don’t spend a ton of time trying to make your situation fit into a box that doesn’t apply.
- Plan for Next Year – Filing your taxes gives you an opportunity to check-in with how much you’re earning and how much tax you’re paying. Maybe you got a big refund this year, and you can get the amount of tax you pay reduced. Or if you had to pay up, then consider how you can reduce your tax bill for next year. Maybe you divert more of your savings to an RRSP or see if your investments can be more tax efficient. If you don’t like the outcome, then you’ve got a whole year to fix it before you have to do this all over again.
I hope that helped you figure out how to file your taxes in Canada and here’s to big refunds and zero tax headaches! If you have any all-star tax tips, share them in the comments. I’d love to hear what you’ve come up with.
This post was proofread by Grammarly.