Benjamin Franklin said, “In this world, nothing can be said to be certain, except death and taxes.” While the old saying might be morbid, it is difficult to deny its accuracy. Unlike the grim reaper, we know exactly when tax season comes. Best of all, with some preparation and organization, it doesn’t have to be all that bad.
Tax season is here and your taxes are due at the end of this month, and if you haven’t started working on them, you should. If you’re late, the Canadian Revenue Agency (CRA) charges a five per cent penalty on your previous year’s balance owing, adding on an extra one per cent for every month your return is late.
“Household debt is at an all-time high, and we certainly don’t need extra bills,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada. “Some simple preparation will help you avoid penalties and stress, and hopefully position you to actually receive a refund.”
Schwartz recommends a year-round approach to tax preparation. “When we procrastinate on matters of personal finance, we cause stress and problems down the road,” says Schwartz. “It’s a theme we revisit a lot, whether it’s building emergency savings, putting money away for retirement, or shopping for the holiday season – the earlier the better.”
Five Tips During Tax Season
Schwartz and the team at Consolidated Credit have put together a list of five tips to help Canadians prepare for tax season. Be sure to incorporate these actions on an ongoing basis and things will get easier each year.
- Play the accordion. No, we are not recommending starting a polka band. Instead, buy an accordion file folder and keep track of receipts, T-slips, Notice of Assessments, and so on.
- Pay your tab. Find out if you owe money to a government agency. Having an outstanding amount due to overpaid benefits, balances due from previous years’ returns, or provincial fines, will cause delays in assessments.
- Go digital. Get things done quicker and easier by filing online. The CRA says more than two-thirds of Canadians file their returns electronically, which shortens the processing time from 4 to 6 weeks to 10 business days. Go completely paperless by switching to direct deposit, which will eliminate the need (and the time) for the government to mail you a cheque.
- Get help if you need it. Your taxes may be more complicated than others. If you have an income property, are self-employed, or have investment income, you may wish to seek professional help from a chartered professional accountant. If an accountant sounds too expensive, you may qualify for the government’s Community Volunteer Income Tax Program (CVITP), in which community volunteers help low-income Canadians file their taxes.
- Give yourself some credit. Do your research and know which tax credits are available to you – failing to do so could cost you. Reducing your taxes can get complicated; choosing quality tax software can help you navigate the world of tax credits.
Reduce your Debt During Tax Season
It can be hard to stay on top of your taxes during tax season if you are buried in credit card debt. Relieve some of that stress by speaking to a trained credit counsellor. Calling 1-888-294-3130 is free, confidential, and non-judgmental. You can also start the process online by trying our free debt analysis.