In the rush before the April 30 tax filing deadline, it’s tempting to hastily fill out that return and just get the thing out the door. But making an error on your tax return can be costly. It can mean the loss of a tax credit or deduction that could save you money. Or, more worrisome, it could lead to queries from the Canada Revenue Agency or even a full audit.
Here are some common tax return errors that could get you a query from the CRA:
Incorrectly Declared Income
Scan the income section of your tax return carefully and make sure the money you make is going in the right places. Separate out employment income and anything you make through self employment, as well as ensuring things like dividends, pensions and benefits from disability or workers’ compensation go in the right box. Avoid double counting certain income such as taxable benefits. Don’t neglect to count tips or bonuses — the government has its eye out for people in certain industries, particularly hospitality and construction.
There’s also been a big crackdown on those who have sold homes or condos for profit; gains on property are not tax deductible if the home is your primary residence, but CRA is looking closely now at those who have sold numerous properties in recent years.
Be Careful With Kids’ Stuff
The tuition transfer and childcare expense are two of the most commonly reviewed credits on your tax return. With the tuition credit, parents need to file form T2202 (and it needs to be signed by the student). For childcare, the government wants to see a proper receipt, with a SIN if an individual is taking care of your kids. For summer camps, you can only claim the childcare portion of the cost, so you need to get detailed receipts.
Don’t Be Erroneous With Business Expenses
CRA offers multiple categories for business expenses and some costs could, in theory, go in two or more categories. Many self employed people are tempted to lump all their expenses into one or two categories. This practice is not approved of by CRA and can garner an audit.
Missed Chances On Deductions
It’s also in your best interest to ensure all of your deductions are accounted for. No one will be upset if you miss these deductions – but you won’t be saving money either! Check out the top commonly missed tax deductions:
If your investments lost money this year (that’s possible, sadly), don’t forget to include this in your return. This figure can help offset capital gains in past and in future years.
If you’re retired and collecting a pension, make sure you’re benefiting from splitting your pension income between you and your spouse. This is not straightforward – you might have to do some research to be sure it’s allowed, but it could lead to a big reduction on your tax bill if you do it properly.
Providing you are moving closer to work, things like real estate fees and actual moving costs are a lucrative deduction. Keep all your receipts from expenses incurred through relocation.
Disability Tax Credit
If you or someone you support has a serious disability, getting form T2201 filled out by a doctor can lead to multiple years of this lucrative credit.
If any of these tips have you feeling more confused than reassured, consider getting help filing your taxes. Indeed, we’re close to the deadline for 2012 taxes, but a professional eye, even a franchised tax service, might be helpful if tax season is not your favourite time of year.