Preparing Individual Income Tax Returns
If you do them yourself, and many people should, here are some practical tips:
- File a return even if you have no taxes to pay. Benefit programs such as the OAS Supplement, GST Credits, Working Tax Benefit, Child Tax Benefit and some provincial programs such as BC provincial medical plan premium subsidies are income based and generally require you to file returns. You can transfer certain unused non-refundable tax credits to your spouse or partner.
- File on time. If you file late and you owe taxes you will incur a late filing penalty of up to 17 percent of the unpaid taxes. If you are a chronic late filer the penalty can more than double to a maximum of 50 percent. Interest will also be charged on the unpaid taxes and penalty. The filing deadline is April 30. If you are reporting income from a proprietorship the deadline is June 15, but interest on unpaid taxes starts after April 30.
- Get a computerized tax preparation program. These are excellent tools which will systematically guide you through the preparation process, give you helpful tips throughout, do all of the arithmetic, allow you to try different options without going through seemingly endless calculations, and optimize deductions and tax credits (especially when you do both spouses' returns together.) These programs allow you to carry forward prior year's information. You can get programs for free on-line .
- Do both spouse returns together. This will enable you to optimize deductions and tax credits.
- Make sure you have all of your information on hand before you start.
- The Revenue Canada Agency in partnership with local community groups organize free tax preparation clinics that are primarily geared to assisting eligible people with non-complex returns. Each clinic determine their own eligibility criteria. However, the following people are normally eligible: Low-income individuals and social assistance recipients; newcomers to Canada; seniors; students and aboriginal persons.