If you’re already dreading filing your taxes in Canada this year, don’t worry.
Tax season can feel overwhelming, especially with all of the expenses you have to track and the credits and benefits you have to remember to claim.
Canadians can start filing their taxes online with the Canada Revenue Agency (CRA) on Feb. 24.
To help you prepare, we spoke with Gerry Vittoratos, the national tax specialist at Montreal-based online tax filing service UFile.
He shared the best practices to create a smooth tax filing experience.
Organize your documents
Vittoratos says the key to filing your tax returns stress-free is to have all of your documentation ready.
He says you can do this easily through the CRA’s My Account, where you can find your official tax slips.
The tax specialist advises you to have all your receipts available when it comes to claims you can make, like donations and medical expenses.
“Those don’t come on the government website; you have to make sure that you have them and that you archive them properly along the way,” he said.
If your tax filing system is in disarray, Vittoratos suggests starting a folder at the beginning of the year where you can throw all of the documents and receipts that you think you’ll need to file your return.
“Once tax season comes around, take it, sort it, filter it, and then you get the documents that you need, and you know you have everything you need to be able to file your return,” he explained.
Common mistakes while filing taxes and how to avoid them
Vittoratos says the most common mistake Canadians make when filing taxes is omissions, or “claims that people miss out on because they’re not archiving their documents properly.”
The tax specialist says people don’t realize they’re making this mistake until they find a receipt after filing their tax return. That’s why he stresses having all your receipts in one place so you don’t miss out on any benefits or credits.
Vittoratos adds that something Canadians should be more aware of to help them get a bigger tax return is the federal government’s budget announcements.
“They always put tax return goodies in them,” he explained. “A lot of people don’t realize that when the government announces [new credits or benefits], they’re applicable. Usually, they’ll tell you, ‘Okay, I’m gonna give you this new credit, and, hey, guess what? You can get it as of today.'”
While reading the government’s economic statements probably isn’t on Canadians’ to-do list, Vittoratos says it pays to pay attention so you can immediately start benefiting from any new credits.
“Because if you wait until the next year when you’re filing your returns, too late, the calendar year is gone, and you missed out on the chance of making those claims,” he said.
An example the tax specialist gave was a public transit credit Ottawa implemented years ago that allowed Canadians to claim their transit passes.
“The government announced in the budget that they were going to stop it by the end of the year,” he said. “A lot of times, people will buy their bus passes in January, but they could have bought them in December and had them count on their tax return.”
Another example Vittoratos gave is claiming donations. The government extended the deadline for donations you can claim by two months. So, any donations you make until Feb. 20, 2025 can still be claimed on your 2024 tax return.
“If you’re not aware that the government announced this, you’re not going to benefit from it,” he explained.
Know your RRSP and TFSA contribution room
Some Canadians online are wondering whether their CRA My Account is showing the correct RRSP or TFSA contribution room.
Vittoratos says the CRA will only update your contribution room in January because that’s when financial institutions share your transactions with the government.
“Whatever you do the rest of the year, you’re responsible [of keeping track] because that number does not change and will not be updated by the CRA until the following year,” he explained.
The tax specialist says it’s similar for RRSPs; however, instead of updating the contribution room at the beginning of the year, it will update when you file your tax return.
“Your RRSP is based on what the government calls earned income, which is basically your working income,” said Vittoratos. “Essentially, 18 per cent of your working income is what you add to your RRSP limit every year, minus whatever you contribute, and then your net amount becomes your limit for the year.”
The government will update this on your notice of assessment.
Forgot to claim something? No stress
If you find yourself in a situation where you forgot to claim a receipt after filing your taxes, don’t panic. Vittoratos says there are two ways you can amend your tax return.
He says the simplest way is to launch an amendment through your CRA My Account. The government will show a column with the tax return you declared and provide a second column where you can change the amount.
“It’s done online, and within a week, the government processes your amendment,” he said.
The other way is to refile your taxes by going to the software you use or your accountant, adding the missing receipt and then retransmitting the return electronically.
Why you should file your taxes early
Vittoratos says there are several reasons Canadians should file early, depending on whether they get a refund or owe money.
The first reason to file early is for people who owe money. The tax specialist says it’s better to file your taxes early so you know what you owe and have time to save up to pay by the April 30 deadline.
“You don’t want to have a nasty surprise where then you realize, ‘Oh crap, I don’t have the funds to pay them,’ and now they start charging you interest,” he explained.
If you’re one of the many Canadians who gets a refund, Vittoratos suggests filing early to get your money back as soon as possible.
“If you lend money to somebody, would you want that money back as soon as possible so you can do something? Maybe go on vacation, pay off your debt, save and invest it,” he said. “Why would you leave it in the government’s hands?”
