Filing Your Personal Tax Returns: What Do You Need To Know

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Filing Your Personal Tax Returns: What Do You Need To Know

Canadian Tax Strategy Accountants in Edmonton

Filing personal tax returns on time is mandatory for all earning professionals of the country. The money collected in the form of personal and income tax is spent in a number of different ways for the development of the economy and public welfare. According to the federal website of the Department of Finance, out of the total government revenue of C$ 293.5 billion collected, C$ 287.2 billion is spent on economic development. So, you can imagine the magnanimity at which the Canadian government spends for the country. The total government revenue is inclusive of the taxes you pay.

Some of the key areas where government revenue is allocated are infrastructure development, skills building initiatives for an improved labor force, eradication of gender imbalances, improvement of the socio-economic conditions for Canada’s indigenous people and limitation of the soaring housing prices. Hence, the amount you pay as taxes is used for the betterment of the Canadian society.

All Canadians are expected to file their personal income tax returns by the 30th of April every year except for sole proprietors, who are allowed to file their tax returns until June 15th. If this day falls on a Sunday or a public holiday, then the day after that is considered to be the deadline. Today, we will focus on the crucial things that you need to know before filing your personal income tax returns. This is especially suited for those who are new to this process and are about to file their personal income tax returns for the first time:

How is it Done?

To begin with, let’s take a look at how you can file your personal tax returns.

Filling your income tax and benefit return consists of a few major tasks. The steps involved in this process are as follows:

1) Collect all your documents that are indicative of your income and any deductions and credits you plan to claim

To fill out your tax return you will require all your documents that state your income such as the tax slips, your original T4 slip and other types of tax information slips.

2) Select a certified software to file your personal tax returns online

Opt for a Netfile certified software product to fill out your tax return. Some of these software programs are free depending on your individual tax situation.

3) Review your information and make sure it is up-to-date

If you have had a major change in your life like having a child or getting married, then you have to inform the Canada Revenue Agency (CRA) as soon as possible. This helps you get your tax benefits on time.

4) Collate all data and report your annual income

See to it that you report your total income while filing your tax returns. This includes your earnings from inside and outside Canada.

5) Figure out the places where you can claim for deductions, tax credits, and expenses

Consult with your accounting expert to know more about the deductions, tax credits and expenses you can claim.

6) Send your tax return to the Canada Revenue Agency

You can either file your tax returns online through NETFILE or mail it to the Canada Revenue Agency. Sending tax returns online is easier and quicker than sending it through the mail.  If you send a paper return by mail and you choose to receive your refund by cheque, it generally takes eight weeks.

7) Maintain all your tax documents for at least a period of 6 years

This helps in case the CRA decides to review your past records. Hence, it is recommended you store your documents for at least a period of 6 years after filing your tax returns.

How to File your Personal Tax Returns Online?

According to a report by Turbotax, the Canada Revenue Agency processes more than 25 million tax returns every year, out of which two-thirds are filed online.  As we move towards digitization, the CRA will encourage more and more people to file their personal tax returns electronically. For those of you who are unclear about the online procedure, here is a step-by-step guide to go about it:

1) Check for eligibility for filing tax returns online

No doubt that filing online is a convenient option but not everyone is eligible for this. There are certain types of tax returns that cannot be filed with the Canada Revenue Agency online. For example, if you are filing an amended return or filing for a deceased or a bankrupt person, or if you need to change your name, address or direct deposit, then you are not eligible to file your personal tax returns online.

2) Choose an appropriate software program

The Canada Revenue Agency has listed a series of certified tax preparation software programs. The most popular software program for personal tax returns is Netfile. It supports direct transactions between you and the CRA. All software programs allow you to calculate the total tax you owe or the refund that you will be getting. Your electronic tax file stores all your income-related information that can be sent to the CRA using the Netfile service.

3) Get started with the filing procedure as discussed above

Collect all your data, review all the information and send your tax return to the Canada Revenue Agency.

4) Check out the Canadian volunteer income tax program

For those of you who are new to the tax filing software, the CRA offers a free service called the Canadian Volunteer Income Tax Program. Through this program, CRA provides trained volunteers that you complete income tax returns and file them online. However, this service is not free if you have self-employment income, rental income or have capital gains to report.

Things to Keep in Mind While Filing Taxes Online

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1) Maintaining your online profile

When you turn to the digital platform to file your taxes, then you have to see to it that you maintain your profile and keep all information up-to-date. A well-maintained profile ensures that you get the best results while filing your tax returns electronically. CRA’s My Account provides benefits that streamline the tax process. You can use Service Canada’s My Service Canada Account, or MSCA to provide access to your employment insurance, old-age security, and Canada pension plan information.

2) Netfile restrictions

When it comes to submitting personal tax returns with Netfile, there are a number of factors that may restrict you from filing. Netfile only processes original returns for the current year, so amended returns require a paper copy. And, you cannot use Netfile if you have declared bankruptcy. To stay updated on the restrictions, check the CRA website from time to time.

Benefits of Filing your Tax Returns Online

There are a lot of benefits associated with filing your returns on time and online. Firstly, paying your taxes on time prevents any possible delay in getting the benefits and the credit payments. It will also help you avoid interest and penalty charges. Secondly, the online services are fast, secure and easy-to-use. Moreover, when you file online, the software guides automatically calculate your returns for you. It also ensures that you do not miss out on any benefits, credits or deductions that you are eligible for. If you are registered with the My Account service, you can use the auto-fill the return service to automatically fill out your income tax details, thereby making your life easier.

So, this was a guide to filing your personal tax returns. We hope this helps you file your returns on time to make the most of it.

Why Consult an Accounting Firm for Filing your Personal Tax Returns?

Consulting a reputed accounting firm can help you in ways more than one.  Firstly, accounting experts from these firms can help you with innovative tax strategies while providing education to support increased financial well-being. Be it personal tax returns or corporate tax returns, experts can help you with tax preparation procedures like collating data, and calculating figures. They can also help you manage your tax issues due to participation in tax shelters. Financial experts at accounting firms have a good understanding of your rights and responsibilities after signing a contract and can act as a link between you and the CRA to file your taxes.

People make mistakes all the time and, it can be tricky to figure out an error if only one has occurred. An accounting firm can investigate the return and pinpoint exactly what went wrong and how to go about fixing it. Don’t be afraid to consult for help if an error was made. Don’t wait for CRA to find it! It could cost you more than what an accountant would charge you to fix the error. Never assume you can fix it in the following year. Always keep a paper or PDF copy of your filed income tax return. This will make the accountants’ job easier and save you money!

If you are on the lookout for a tax consultant to file your returns for the upcoming year, then get in touch with our accounting experts. We would be happy to help you out.

  • Deb Pearl says:

    Thank you for all the tips and help for filing my tax return. I have never filed a tax return on my own before and I don’t really know what to do. I like your tip about consulting with an accounting expert to know about more deductions and other expenses I can claim. I would love to save some money if I could.

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