Filing as single, whether you are married or in a common-law relationship: If you are married or in a common-law relationship (living in a relationship -conjugal- for 12 continuous months), you MUST report your proper status on your income tax return. If you misreport your marital status as single and receive additional benefit amounts you are NOT entitled to (such as CCB, Climate Action Incentive or GST/HST) the CRA may require you to repay the excess amounts.
Losing your receipts: The CRA requires all persons to maintain all receipts and slips for income and expenses claimed on their tax return for a period of 6 years. This is in the event the CRA requests a review. Individuals are required to maintain official receipts for daycare, medical, charitable and political party donations, tuition expenses, employment expenses, and all other expenses you may have claimed. The CRA may disallow the claims if the person fails to produce proper records/receipts/documentation.
Under-reporting your income: Some people either give-in to temptation or forget. Either way, it is vital to report all of your earnings in each tax year. If the mistake has not yet been caught by the CRA and you have not been audited, this oversight can be corrected by submitting a re-file/adjustment (T1). If you have been reassessed, the CRA will add the previous undeclared amounts to your income and also the refund amounts which you may have to pay back, they also may hit you with a penalty and interest on all amounts due. If someone chooses not to report certain income (i.e. cash tips earned by food services persons), the CRA can find the under-reporting person by cross-referencing the restaurants income vs the food services persons earnings, through all filled income tax returns.
Missing Tax filing deadline: This should be the #1 common mistake made by many taxpayers every year. You can file your taxes starting on February 20, 2023 and the deadline for filing is April 30 2023, however April 30th falls on a Sunday therefore it’s extended to May 1st, 2023. The CRA accepts all returns postmarked on or before May 1, 2023. However, if you are self-employed you do have until June 15th, 2023, to file.
Please note, if you owe any taxes back to the government, the deadline for payment is May 1st, 2023 (For both individual taxes and business taxes).
Claiming ineligible expenses: Making these claims which could reduce your taxable income and increase your refund could put you in hot water with the CRA. Common errors are with employment expenses. The individual claims items that were not on the T2200, which is a declaration of the conditions of employment signed by their employer. The employees T2200 allows for insurance and gasoline expenses; the employee can not claim lunches and cell phone charges as a business expense on their tax return.
Not claiming deductions and credits: Mak Tax uses the latest tools that allows us to capture all items that you qualify for: Overlooking any deductions/credits that you may be qualified for will increase your taxable income and result in higher taxes due.
Most common overlooked deductions/credits:
· Professional dues
· Charitable donations
· Investment carrying charges
· Canadian political contributions
· Childcare expenses
· Medical expenses
· Interest on amounts borrowed for investment
· Home Buyer’s Amount
· Moving expenses
· Student loan interest
Forgetting to transfer un-used credits to family: If you have unused tuition tax credits for the current tax year; you can carry them forward to claim in future years. The caveat with this is, you MUST claim your carry forward amount in the first year that you have to pay income tax. Another option is to transfer up to $5000 to qualifying relatives (parents, spouses, common-law partners, grandparents).