Navigating Personal Taxes: Do’s and Don’ts for Better Results
Tax season can be a daunting time for many individuals, but with the right knowledge and guidance, you can navigate through it smoothly. At Hendry Warren, we understand the intricacies of personal taxes and are here to offer you some valuable tips to improve your tax results. If you missed our most recent live webinar on Navigating Personal Taxes you can view it on our YouTube channel. We host free monthly webinars so be sure to sign up for the next one held April 8th on Registered Investments!
Let’s delve into some of the do’s and don’ts:
Payment and Filing Deadlines
Knowing your deadlines is crucial to avoid penalties. For most taxpayers, the deadline for filing taxes and any balance owing is April 30th. However, self-employed individuals have until June 15th to file, although taxes owed are still due by April 30th.
DO: Keep an eye on HST deadlines if you’re registered and ensure compliance with installment requirements.
DON’T: Ignore instalment requirements and reminders sent by CRA
Capital Losses
Understanding how to utilize capital losses can optimize your tax situation. These losses can be carried back up to three years, applied in the current year, or carried forward indefinitely to offset capital gains.
DO: Analyze your marginal tax rates across different periods to make the most beneficial choice.
DON’T: Miss the opportunity to recover income tax by carrying losses back to offset capital gains in previous years.
Principal Residence Reporting
Ensure you meet the criteria for designating your property as a principal residence, as this can have significant tax implications.
DO: Be mindful of reporting requirements related to the sale or change of use of your principal residence.
DON’T: Discount the value of income tax advice when selling your principal residence.
Home Office Costs
With the elimination of the simplified method for claiming home office expenses, it’s essential to follow the detailed method and meet eligibility criteria.
DO: Keep records of eligible expenses and consult with your employer regarding Form T2200 requirements.
DON’T: Miss out on deducting expenses you might be eligible to claim on your tax return.
Deductions
Deductions can lower your taxable income and potentially save you money. Taking the time to discuss your options with your accountant and understand the qualifications can have a significant impact on your personal taxes.
DO: Explore various deductions available to you, such as childcare costs, moving expenses, support payments, accounting fees, investment fees, and RRSP contributions.
DON’T: Miss out on deducting amounts you might be eligible to claim on your tax return.
Pension Splitting
Understanding pension splitting requirements can lead to lower income taxes and other benefits. Ensure eligibility criteria are met and explore the advantages of equalizing income with your spouse.
DO: Optimize your family net tax result by splitting eligible pension income as appropriate.
DON’T: Assume certain types of income will not qualify for pension splitting.
Disability Tax Credit
Individuals with severe and prolonged mental or physical impairments may be eligible for the disability tax credit. Familiarize yourself with the application process and supplementary credits available to maximize your tax savings.
DO: Speak to your doctor about completing the application form for the disability tax credit for yourself or dependent family members
DON’T: Assume an ailment or impairment would not qualify for the disability.
Record Keeping Requirements
Maintaining accurate records is essential for tax compliance. Keep records for at least six years and be aware of any exceptions to this rule.
DO: Set yourself up for success ASAP by using a standardized record keeping system (QuickBooks Online, Excel, etc) with appropriate back ups.
DON’T: Discard your records prior to the expiration of the required timeframe.
Still with us? Navigating personal taxes can be complex, but with these tips and the assistance of the Hendry Warren team, you can ensure a smoother and more successful tax season. Don’t hesitate to reach out to us for personalized guidance tailored to your specific tax situation. Remember, proper tax planning and compliance can lead to significant savings in the long run!
