Some scholars believe the first tax returns were filed on clay tablets some 4,000 years ago, counting goods such as grain and wood moving from the provinces of Mesopotamia to the Royal Ur III Dynasty. Whether the ancient scribes were under stress and anxiety as their deadlines approached is unknown, but fortunately filing your tax return no longer involves incising clay tablets and presenting them to an absolute monarch. Now we have other worries, like making sense of a complicated tax form and hoping we haven’t neglected to take advantage of an available tax deduction. Here are eight questions that may make preparing your 2018 tax return a little easier.
When are your taxes due?
April 30 is the deadline to file your taxes for most Canadians. If you or your spouse or common-law partner was self-employed in 2018, you generally have until June 15, 2019 to file. However, if you have a balance owing for 2018, you are expected to pay it on or before April 30, 2019, or penalties and interest will apply.
Got everything organized?
If you think filing taxes is just another boring administrative task you have to do annually, like renewing your license plates, remember there may be money at stake if you forget a tax credit (gulp!) or file late. Give yourself time, find your receipts and compare your filing with last year’s return. Ensure your tax return is accurate and submit before the deadline. Note, you can log into My Account on the Canada Revenue Agency (CRA) website, or use the MyCRA app on your mobile device, to view your personal income tax and benefit information online.
Do you know what’s new this year?
Residents of New Brunswick, Ontario, Manitoba and Saskatchewan can claim the new federal Climate Action Incentive payment and it may reduce your 2018 tax payable or increase your refund. The amount you could be entitled to depends on where you live and your family situation. A family of four living in Saskatchewan could receive $609 but if you’re in New Brunswick, the amount could be $256. And the payment could be higher if you were living in small or rural communities.
Do you have tax obligations in the U.S. or another country?
If you are someone who spends a significant amount of time in the U.S. or has a parent who is a U.S. citizen, the Internal Revenue Service (IRS) may, depending on the specific circumstances, regard you as a “U.S. Person.” That means you may have an obligation to file a tax return with the IRS even if you may not owe any U.S. taxes. Find out what your obligations are if you have any ties to the U.S. or to other foreign countries.
Are you up on last year’s small business tax changes?
There have been some wide-ranging tax changes over the past two years, many affecting small business corporations. If you haven’t already done so, consider checking in with your legal and tax professional to re-evaluate decisions you made in the wake of these tax changes.
Do you need to file the T1135?
If you’re a snowbird who owns an income-generating home or condo in Florida, Arizona or anywhere outside of Canada, with a total cost of more than $100,000, you will generally be required to report such property on CRA’s T1135 form. Other properties that must be reported include patents, copyrights, precious metals or gold certificates held outside Canada, as well as U.S. stocks held outside a registered account.
Let your donation be a motivation
Twenty dollars to the local cancer society here and $30 for a fundraiser there all add up, but it isn’t always so easy to keep track of. If you think you may have missed claiming any charitable donations on past years’ tax returns, don’t fret. You can go back and claim donations in the year they were made for any of the previous five years. Those missing receipts (up to five years back) can be claimed on your 2018 return and you don’t have to amend your previous returns. Just dig deep and find those receipts. It may have a worthwhile impact on your tax return.
What about those vacation property upgrades?
If you have a chalet, cottage or cabin in Canada or in the U.S. sunbelt, and have made any capital improvements, make sure to find the receipts and get them in order. The higher the documented cost of any improvements, the lower the potential tax liability that may arise if a gain is realized when the property is eventually sold, even if that is decades away. This isn’t strictly a consideration for this year’s filing but could potentially help you or your heirs down the line.
Do you know a senior who could use help with their taxes?
You might be helping out an elderly relative or parent with their taxes through the kindness of your heart, but this tax housekeeping may ultimately benefit the whole family. That’s because if a senior doesn’t file annual returns, it can potentially make managing their estate more complicated when they pass away. Beneficiaries can’t receive the estate until it is given the green light by the CRA and this can be challenging if there are tax returns missing.
“Tax preparation time is not only a time for what you owe the government, it’s a time to think about what you owe yourself,” says Sandra Bussey, High Net Worth Planner for TD Wealth. Since you’re already deep into financial calculations, she says you may want to think about how you’re progressing towards financial targets like retirement savings, RESPs or other wealth goals. And if you don’t know, you can make an appointment with an advisor.
— Don Sutton, MoneyTalk Life