The tax-filing deadline is almost here, but there is still time to save money on your 2018 return. Don't pay the government any more than your fair share.
Here is the list of the top 5 mistakes tax filers make -- which you should avoid
1. Fail to file on time or at all
For those who owe tax, missing the April 30 filing deadline can draw severe penalties and interest, including an automatic 5-per-cent charge, plus 1 percent a month over the next 12 months.
Some don't file at all. When only one spouse is working, the other should file a nil return. (Not doing so could negate their family unit being able to receive benefits such as the sales tax, GST and child tax credits.)
2. Parents fail to pick up tuition transfer
A number of parents, grandparents, and spouses fail to take advantage of the opportunity to receive up to $5,000 available in education and tuition fee transfer amounts from students who have little or no income and therefore can't use the full credit. This failure can significantly increase the tax the family unit pays. Contact us to learn more of this underused credit. It’s not too late!
3. Inefficient filing of donation credits between spouses
Spouses should combine donation credits to get the most bang for their charity buck. This is significant because the federal non-refundable tax credit rises from 15 percent to the top tax threshold of 29 percent when donations exceed $200.
4. Inefficient filing of medical expense credits
You should combine the medical expenses of your husband or wife to take advantage of a threshold, which is the lesser of $2,302 or 3 percent of that individual's net income for the year. Claiming the expenses separately will greatly reduce the chance of you receiving the credit. Normally, the spouse with the lower income should claim medical expenses.
5. Failure to take full advantage of self-employed deductions
Many self-employed individuals fail to take full advantage of the savings available to them. However, the self-employed individual should be careful in claiming too high a proportion of expenses, particularly in areas related to automobiles or entertainment. Doing this might also serve as a red flag to the Canada Revenue Agency (CRA), prompting a review. As a result, all entrepreneurs should maintain detailed logs to back up their expenses.
The above list is just a sample; each tax-filing situation is different. For information relating to your specific personal or business needs, contact us. We are here to help.