Episode 18: Getting Ready for Tax Season

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E18: Getting Ready for the Tax Season

It’s almost February, and I can feel it in my bones – tax season is coming! This video and related blog post will serve as a guide to help you get through a drama-free tax season.

WHEN SHOULD I FILE?

The first step towards a successful tax season is to prepare early by organizing your documentation well in advance of the tax deadlines. The last day to file as an individual is April 30th, 2019, and that is also the deadline to pay any tax owing.

If there is a chance you’ll owe taxes, you should file several weeks in advance of the deadline so the Canada Revenue Agency (CRA) can assess your return before payment is due. If you file late and end up owing taxes, you’ll pay interest and penalties on your outstanding tax balance until you submit your payment to the CRA.

If you have self-employment or rental income to report, your return isn’t technically due until June 15, 2019, but any taxes owing are still due April 30, so I typically recommend sticking with the earlier deadline.

CRA is currently closed for e-filing of any tax year, and will likely re-open around February 18th – this will be the earliest you can file your 2018 tax return, and I would only recommend filing that early if you are 200% sure you have all of your T-slips. T-slips, such as T4’s, T5’s, T3’s, etc, are not due to be filed by your payers until February 28th, so it’s often a good idea to hold off and make sure you have everything.

Other slips that may come a little later are RRSP contribution slips (because the contribution deadline is March 1), and T5018 slips - if you have done any construction contracting type of work these are not due until 6 month’s after the payers year-end, so that could be as late as June 30. If you do construction contract work, it’s a good practice to track your own income so you do not have to wait on the slip.

DO I HAVE TO FILE?

Technically, you only have to file your taxes if you owe money to the government. That said, it’s still good practice to file your taxes every year for three main reasons.

1. If you don’t owe money, there’s a chance you’ll receive a refund from the government. I’m sure you can think of ways to spend that refund!

2. CRA uses your tax return to assess whether you qualify for various benefit programs, such as the GST credit, Canada Child Benefit, Alberta Carbon Levy Rebate, Working Income Tax Benefit, and more.

3. If you are applying for any type of credit (i.e. a loan, mortgage, credit card) or any kind of support or subsidy program (i.e. child care or rent subsidy), you will need to supply a recent tax return.

WHAT DEDUCTIONS CAN I CLAIM?

Here in Alberta, there hasn’t been a lot of changes in what deductions can be claimed or not between 2017 and 2018 on the personal side of tax. Most of the tax changes that have been rolled out this year are regarding corporation tax laws, which we can cover in a separate episode. Here are the tax deductions that are still in place for 2018:

Charitable Donations

Political Contributions

Medical expenses (now including fertility treatments and psychiatric service animals!)

Tuition

Interest paid on a student loan

Investment Carrying Charges & Interest

Adoption expenses

Northern Residents Deduction

Moving expenses (when you’ve moved at least 40 kms specifically for work or school)

Child Care expenses

Union or professional dues

RRSP contributions (also see Episode 17 for more information on this!)

Home Buyer Credit

Teacher School Supply credit

Disability-related credits – there are several credits available to people with disabilities (certified by a doctor) and those who care for them, including Home Accessibility Expenses

Eligible Dependant deduction for single people with a dependant

Volunteer Firefighters & Search/Rescue Volunteers

If you are self-employed, have rental income, or your employer gives you a T2200 form so that you can claim employment expenses, there’s a whole other menagerie of expenses you can claim, and I have talked about them at length in episodes 2, 3, 5, 10, and 11! There are also VERY handy checklists on my website that list all of the common expenses for each of these types of tax returns.

WHAT TAX BRACKET AM I IN?

The percentage of tax you pay depends on how much your taxable income is – that is ALL of your income minus deductions and credits. When you pay tax, you are paying both federal and provincial tax. Each of the provinces has a different progressive tax bracket structure, and so does the federal government.

The tax brackets increase a little each year, based on inflation – this means that you can make more money and stay in a lower tax bracket. Here are the 2018 numbers:

HOW CAN I BE PREPARED FOR THE TAX SEASON?

Lucky for you, I have prepared TAX CHECKLISTS for almost every personal tax situation possible!

Start with the Personal Tax Checklist

Then, if applicable:

Self Employment Tax Checklist

Rental Property Tax Checklist Employment Expenses Checklist

Foreign Income Reporting Checklist

And as always, if you have any questions at all about what is required, reach out to me and I’d be happy to chat!