Pattie Lovett-Reid: Tips for last-minute tax filers
This is it: the April 30, 11:59 p.m. deadline is fast-approaching. And while I recognize many have already filed, here are a few reminders from CPA Canada:
- Did you receive additional tax slips after filing? For those that have already filed, receiving additional or amended tax information is not uncommon. If the tax information is related to income that you haven’t reported, it is important to change your return. If you have signed up for CRA’s My Account service, the CRA will have a listing of your income slips. For those who haven’t filed yet, checking My Account for a listing of your income slips will help you make sure you have included everything (and if you use tax software, you can even download the slips into your tax return).
- Remember to pay tax instalments. If you earn income that has no tax withheld or does not have enough tax withheld during the year, you may have to pay tax by instalments. This can happen if you have rental, investment, or self-employment income for example. This can also happen if you have more than one job. Generally, federal instalments are required for 2018 if your net tax owing for 2018 will be over $3,000 and tax owing for either 2017 or 2016 was over $3,000 (for residents of Quebec, the threshold is $1,800). You can avoid interest and penalties by paying the amounts calculated by the CRA. The CRA typically sends reminders in February and August of each year. If you do have to pay, instalments are generally due on the 15th day of March, June, September, and December. Quebec residents should also determine if provincial instalments are due.
“Filing your tax return is about reporting last year – it’s not ‘tax planning’ because you can’t plan the past,” says Doug Carroll, practice lead for Tax, Estate & Financial Planning at Meridian Credit Union. “Still, this is a good time to consider what you may have missed out on and where opportunities lie, so you can better plan the coming year and your future beyond.”
There have been some changes this year to a few tax credits. Here are some tips and reminders from Meridian for last-minute filers to keep in mind.
Have you filed your taxes yet?
1. First-time filers – file on time
The CRA began accepting 2017 personal tax returns on Feb. 26 and you must file by midnight on April 30. Late-filed returns face a penalty of at least five per cent of any tax owing, and interest on overdue tax, currently set at six per cent Bottom line: file on time.
2. Parents – don’t forget child-care expenses
You may deduct child-care expense incurred to allow you to earn income, carry on a business, go to school or conduct research. Generally, these expenses must be claimed by the lower income spouse. Tuition/education, leisure and recreation costs do not qualify.
3. Spouses – file together
You must let CRA know whether you have a spouse (legally married) or common law partner (CLP). CLP applies if you are currently in a conjugal relationship that has lasted 12 continuous months, or you live and have a child together by birth or adoption.
4. Students – tuition is still okay, but other credits have ended
You get a tax credit for tuition paid to an eligible educator, or for examination fees that allow you to practice a trade or profession – but the textbook and education credits ended in 2016, though you can claim unused education amounts carried forward from past years.
5. Homeowners – don’t forget the principal residence exemption
When you sell your principal residence there is no tax on its gain in value. Since 2016, you must report those dispositions on your tax return in the year of sale. There is still no tax on the gain, but penalties apply if you are late to report.
6. Seniors and retirees – there’s a credit for medical expenses
The medical expense credit is open to all, but as we age we tend to have more frequent and larger medical costs. This credit can be based on any 12-month period ending in the tax year, so examine when costs were incurred to decide how best to make your claim.
7. If you have disability needs – there's a disability tax credit
The purpose of the DTC is to provide tax relief to someone with a severe and prolonged impairment. No accounting is required for how the reduced taxes are used. For 2017, you may receive up to $1,632 from the federal and Ontario governments.
8. Self-employed – filing deadline is not the same as tax payment due date
The tax return filing deadline is Friday, June 15, 2018 if you were self-employed in 2017. This is the same deadline for your spouse/common-law partner (CLP). However, remember that you must pay any tax owing by the Monday, April 30, 2018 deadline.
9. Investors – you can deduct fees for some investment advice
You may deduct fees for investment advice in non-registered accounts. Advice for RRSPs, RRIFs or TFSAs is not deductible, nor is financial planning or tax planning advice. Interest on money borrowed to earn non-registered income is normally deductible.
10 Executors and estates – multiple returns
In addition to the familiar personal tax return for the final year, an executor may file up to three more optional returns [for ‘rights and things’, ‘partner or proprietor’ and ‘graduated rate estate’]. Some tax credits may be claimed on more than one return, while other credits must be split among them.