Income Tax for some people is like a four letter word, they just don’t want to hear it, and dread the April 30th
deadline we have here in Canada to file a personal income tax return.
But it does not need to be like that.
I have prepared and been filing personal and small business tax returns for over 15 years.
What started for me as a seasonal job, with H&R Block to supplement my regular income, has turned into a small business.
I find it incredibly rewarding when I help people take advantage of all tax credits that are available to their families.
From arts and sports credits for kids, to home improvement credits for seniors, there are many credits people don’t think of when filing their taxes.
Tax Tip: Did you know that if your Grandmother needs a shower bar in her bathroom, that she can get a tax credit for having it installed? If you need to have your home wheel chair accessible, there is a credit for that too.
Most people know of the popular tax credits, medical, rent, property taxes, and childcare. What they may not realize is that the childcare credit also covers things like paying for a day camp for a PA day, or summer camp in the summer.
It may simply be paying the neighbourhood childcare provider who watches your kids for March Break. The child care credit does not go away because your children are in school.
Charitable donations are a wonderful way to bring down your payable tax bill; registered Ontario Charities give receipts for cash donations, and a fair market value receipt for donations of goods.
For instance, that bag of clothes and old Tupperware you drop off at Goodwill, make sure you grab a receipt. Are you pledging $10.00 for your nephew to participate in jump rope for heart, keep the receipt?
How To File Income Tax
Most average Canadian families do not need a CPA (Chartered Public Accountant) to prepare their taxes, nor would they want to pay those types of fees.
There are many options for filing your taxes, you can do it yourself using one of the many Income Tax preparing software programs available whether web-based or store-bought.
Ways to file your Income tax return
- Turbo Tax Canada
- Studio Tax
- H & R Block Canada
- Other independent income tax return companies
Alternatively you could go to one of the “big box” preparing offices, or find someone like me, with years of experience that will prepare and file your income tax return for a fraction of the cost.
Please don’t ever use “Cash Back” tax services if you don’t need to. These days if you have an income tax refund coming, you will receive it in about 10 days, after E-File with Direct Deposit.
Cash Back services keep a large portion of your return. The amounts that are charged are regulated by the government and are 15% of the first $100.00 and 5% of every $100.00 after that.
That can calculate to $90.00 plus HST on every $1000.00 of your return. (On a basic income tax return)
Income tax deductions
Below are some Income Tax Deductions Tips to maximize your personal income tax refund and lower your payable amount:
Claim medical expenses- People miss claiming common expenses like Blue Cross and fees paid to medical practitioners like speech-language pathologists, occupational therapists and acupuncturists.
Maximize babysitting deductions- The maximum dollar amounts claimable have not changed this year, $4000, $7000 or $10,000 which depends on the child’s age and health. Usually it’s the lower earner who should claim these expenses.
Minimize tax on severance- If you’ve lost your job, your severance package can help but it can also put you into a high tax bracket because it’s usually paid in a lump sum. One way to reduce your taxes is to maximize your RRSP contribution room.
Claim the new tax credits for children’s activities- Many parents are still not aware of this Children’s Art tax credit.
Parents can claim up to $500 of eligible expenses per child under the age of 16 at the beginning of the year in which the expenses are paid or under 18 at the beginning of the year in which the expenses are paid and if they qualify for disability tax credits.
Any eligible expenses in 2011 and subsequent years would qualify for this credit. These are new amounts to be claimed on the tax return for enrolling your children in the arts or sports activities. Because the Children’s Arts Amount is new, you’ll need to remind yourself to dig out the receipts.
What you can’t claim on your income tax return
- Interest on your mortgage (unless you have income property)
- Medical expenses for pets
- Home Improvements (with some exceptions, the new healthy home credit)
- Funeral costs, wedding costs and legal fees paid for separation or divorce agreements
- Public Transportation costs if paid daily or per use (Monthly pass purchases can be claimed as a credit on your Ontario income tax return.
Average Cost To File Your Canadian Income Tax Return
However you choose to file your Canadian Tax Return, be sure to keep all receipts and supporting documentation of everything you claim. You can expect to pay anywhere from $30.00-$200.00 to prepare and file a basic return in Canada.
You may pay around $200.00 on the high end for a CPA, $80.00 for a “big box” tax preparing office, and $30.00 for an experienced private tax consultant.
I also can’t stress enough the importance of using your maximum allowed RRSP contributions each year. In Canada we have until March 1 st to make contributions that will benefit the previous years tax return.
Budget accordingly and try to contribute as much as you can each year even if that means setting aside a little each month or contributing to your group RRSP plan at work. Your maximum allowed limit can be found on your Income Tax Assessment.
Have you filed your Canada tax return yet?
Note: Any above amounts and dates may change from year to year and it’s best to contact Revenue Canada to keep updated on Ontario Income Tax and Canada-wide Income Tax figures.
For more information on your tax return: Canada Revenue Agency.
About The Author: Kim Rosa, a mom and grandmother,semi retired from a long career in the restaurant industry.
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