Navigate This Tax Season Like A Pro With These Top Tips

If April 30 is not marked in your calendar, it should be! As the tax deadline looms, the rush to file returns efficiently and effectively is more crucial than ever. However, every year, certain oversights and errors mean Canadians can miss out on maximizing their return. Luckily, with the right info and tools, everyone can optimize their tax returns, potentially saving or gaining more than they thought possible.

“When it comes to taxes, we’re constantly seeing Canadians losing out on tax credits,” explains Paul Teshima, Chief Client Experience Officer at Wealthsimple, which offers smart investing products and personalized advice to build long-term wealth. “For instance, there were $1.4B of unclaimed tax credits in 2022 alone. Per person, that’s hundreds of dollars Canadians are losing out on when it comes to their taxes. Our advice? Do what you can to ensure you don’t leave any money on the table. It’s your money, after all.”

He adds, “There’s a common misconception that filing your tax return is complicated. In reality, with the right tools it can be simple for the vast majority of filers.”

One such tool is using a do-it-yourself online tax software like Wealthsimple Tax, with new tax plans that range from $0 to $80 depending on your needs, to file their taxes with the CRA. This makes taxes quick, easy and secure.

“What we often hear from clients who use our product is they can’t believe how simple the process is and they wish they had started filing themselves sooner,” Paul says. “Canadians should feel confident in filing their taxes accurately — no matter their tax situation or experience level — by arming them with tools and knowledge to do it themselves.”

Below, Paul offers more top tips to help you navigate tax season like a pro, and maximize your returns this year. —Vita Daily

Hi Paul! How can Canadians best maximize their returns?

Here are three big tips that could help this year:

• Maximize your contributions if you can. Ex: although the deadline has passed, contributing and maxing out your RRSP annually to get the income tax break.
• Know what has changed:
  • Grocery rebate up to $628, but you need to qualify based on your 2021 tax return
  • FHSA – first home savings account
  • COVID benefits have expired
  • Work from home up to $500 flat rate, now needs to submitted with detailed expenses
  • You can no longer claim the “staycation  rebate”
• Don’t file late!
  • The CRA has increase the penalty if you owe money to 10 per cent and that compounds daily
  • 10 – 12 per cent of Canadians don’t file tax returns at all

What are some general tips for preparing your taxes this season?

• Take the time to assess where you are in your life. Whether you’re buying your first home, growing your family, or heading off to university – there are credits and deductions you can take advantage of. 
• Investing early is crucial to building long-term wealth, so it makes a lot of sense to offer tax filing alongside saving and investing

What are some tax deductions and credits people may not be aware of this year?

It’s important to make sure you’re up to date on new tax rules and considerations.

Why is it important for your tax filing to contribute to your RRSP?

Our rule of thumb – If you make over 50/55K, and your goals are to save up for your retirement, to buy your first home or even to go back to school, you should consider investing in an RRSP.

When is the deadline for filing?

April 30, 2024 is the deadline.

What are the limits this year for different account contributions?

• RRSP: $30,780
• TFSA: $6,500
• RESP: $50,000 per beneficiary
  • Government matches 20% up to $2,500 per year, $7,200 max per beneficiary
• FHSA: $8,000 per year, carry forward max $8,000
  • Lifetime of $40,000

Any advice or insights around tax credits?

Too many Canadians don’t know which tax credit they qualify for. E.g. In 2022, Ontarians could apply for a 20% tax credit on a staycation, but many didn’t know this.

What if I missed credits and deductions from other years?

• Some credits like Tuition and Charitable donations can be carried forward from previous years
• Other credits like the Staycation are no longer available for 2023.

Any other advice for Canadians around expenses and contributions as they prep to file their taxes?

• Child Care Expense: 
  • If your child is under the age of 16 years old, you may be able to claim a deduction. 
• Employment expenses: 
  • Some employment expenses such as cell phone bills and office supplies can be deducted as a work expense
• Maximize Your Contributions: 
  • TFSA/RRSP/RESP/FHSA
• Tuition Expenses: 
  • Post-secondary tuition fees can be deducted. Qualifying students can check the tax form from their educational institution to learn how much tuition fees were paid this year
• Charitable donations: 
  • Get those receipts in – you can carry it forward for up to 5 years!