Easy Tips to Take Time Off Taxes
It’s that time of year again. And though tax time should be no surprise, many Canadians file for tax extensions. Whether you hire a tax professional to file for you or file on your own, you’re going to need to get organized to meet the May 2nd deadline. Here are a few tips to help you stay on track so you can stress less and get your taxes filed by Tax Day.
Put Important Tax Dates in Your Calendar
May 2nd is the stand-out date in all of our minds, but there are other dates during tax season to remember. For example, the RRSP contribution deadline this year is March 1st. You should also receive your T4 from your employer before February 28th.
If you use a digital calendar, create an event on important tax dates and set up notifications so you’re reminded ahead of time.
Create a Filing System
Whether it’s color-coded binders, folders, sticky notes, or digital, find and stick to a system that works for you. Be vigilant about grouping your receipts, files, and important paperwork so it’s easy to sort through.
If you do choose the paperless route, consider having a physical paper trail as well in case of an audit.
Learn Your Deductions
At several thousand pages long, the federal tax code makes for heavy, unengaging reading. But some parts of the tax code and their deductions are going to be of greater interest to you. Claiming deductions benefits you by reducing your taxable income, meaning less money owed to the federal government. Not sure where to start? Consider working with a certified tax planner that can help you find out what you can claim on your taxes.
Keep Your Receipts
Hold on to any receipts that you plan to claim for your deductions. File them in your preferred system, but also keep a digital backup in case they get damaged, lost, or faded. Itemize and categorize your receipts into their respective tax areas such as donations, office supplies, and travel.
At the end of tax season, take stock of what you need to keep and what is excess. Not all documents need to be kept indefinitely, and some documents, such as paper receipts, can be shredded after they have been filed. But it’s a good idea to scan some of your paper and keep digital copies just in case.
If you don’t have a paper shredder at home, ask your financial or tax professional if they have a shred day. They may also be able to help you sort which documents can be safely shredded and what needs to stay in your tax folders.
Though cash is easy to use when it’s on hand, if you’re buying something that could be part of your deductions, consider using a credit or debit card. That way, it’s easier to track the expenditure in case of an audit.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.