The dreaded tax “shoebox”
Now that it is “tax season”, people begin to think of their tax information from the prior year. For some, it is buried away in a closet. For others, is is buried in the shoe-box – never to be opened again…. until it is speedily delivered to your beleaguered accountant on April 29th…
With the personal tax filing deadline of April 30th only two short months away, there is still time to properly plan and execute a proper filing to ensure that you benefit from all available tax relief measures, including deductions and tax credits. Proper organization and planning can increase your refund and can reduce the filing cost associated with your tax return by reducing the amount of time your accountant takes to gather, organize and tally your information.
For most people, a small investment of time to collect all of your tax forms and to prepare a summary of income and expenses will significantly reduce the time it takes the accountant to file the return. With CRA’s adoption of electronic filing over the past few years, physical slips are usually not required to be filed along with your return (but must be kept in case of audit requests from the CRA). Since only the totals of income, deductions and credits are filed, client-produced summaries go a long way toward cutting the time and cost involved with filing. Further, the time that had been previously spent gathering data can now be spent analyzing areas that can yield the greatest benefit to you, ie, discussing the eligibility of various employment related deductions.
Within the next month, all tax slips should be received and taxpayers should be in a position to file their tax returns. However, most people wait until the deadline is looking before they file. It is important to remember that the CRA will accept filings at any time (even as early as today) and that any refund that may be due to you will not produce interest by leaving it unclaimed until April 30th. An early filing should reduce the stress associated with filing and could result in an early windfall for those who are due to receive refunds.
Another point to remember – while most people are thrilled to find out that the government owes them money, the real truth is that they had actually overpaid their taxes throughout the year. In doing so, these people have actually given the CRA an interest-free loan, which they will now recover. Suddenly, people may not be so happy. In certain cases, taxpayers have the ability to reduce their tax withholdings in the coming year (if they will have the deductions and credits to support the tax reduction through the year).
So don’t be afraid to scrap the proverbial “shoe-box” and bring an organized listing of your tax items to your accountant. I guarantee that you’ll be happier this year than ever before.