Common mistakes when submitting your taxes

How to make tax season a little less taxing

Did you know many taxpayers make avoidable errors? These simple mistakes often result in missed refund opportunities, additional paperwork, and even penalties and late fees. We’ve compiled some tips and resources to help you avoid these errors and understand what to do if you’ve made a mistake on a past return. 

Common errors

1. Missing or incorrect information

Many Canadians accidentally misreport their income or don’t account for cash they made on the side. Most common forms of income that are misreported are: 

• Tips
•  Income from a part-time, freelance or side job
• COVID-19 benefits payments 
• Income from sales of goods or services 
• Income from an online business 
• Foreign income (Canadian income tax applies to all income sources, including international income or investments)
   

Unclaimed income can cost you – the Canadian Revenue Agency (CRA) has steep fines and penalties for missing information. One simple solution is to use the CRA’s Auto-fill my return (ARF) service which allows you to download slips (like your T4) and other tax related resources.

To help avoid reporting incorrect information, get organized, start your return early and triple check your work. 

2. Filing taxes late

Due to COVID, the tax deadline has been extended in recent years. However, this year you will need to file 2022 taxes by May 1, 2023 for individuals and June 15, 2023 for the self-employed. If you want to file early, the CRA will open its NETFILE service in February 2023.

What happens if you miss the deadline?

• If you’re owed a refund, it will be delayed.
• Benefit payments (like GST/HST Credit or Canada Child Benefit) could be delayed. 
• You may be charged late penalties and fees. The CRA charges a 5% late fee on the amount owning and an additional 1% per month that your return is late. If you submitted your taxes late within the last three years, the fees double to 10% and 2% respectively.
   

3. Missed refund opportunities 

Another common error is not claiming benefits and deductions that you’re eligible for. Claiming all eligible benefits is the best way to maximize your refund and minimize the chance of paying more tax than necessary. 

Common missed opportunities: 

• Moving expenses 
• Childcare expenses
• Disability tax credits 
• Home office expenses: eligible employees working from home can claim home office expenses towards things like cell phone bills, electricity, internet, office supplies and even rent. If your home workspace meets the eligibility criteria, you can even claim some expenses related to your workspace (water, heat, property tax, etc.).  
• Medical expenses: many procedures, devices, treatments and prescriptions given by a medical professional (like prescription glasses, hearing aids, etc.) can be claimed. Some items that are routinely claimed, but not eligible are: vitamins, natural supplements, over-the-counter medicine, bandages, chair lifts and fees associated with certain medical practitioners (massage, kinesiology and cosmetic). 
• Tax deductions for professional dues
• Home-buyers tax credit (up to $5,000) for eligible buyers
   

Did you miss claiming one of these opportunities on a past return? 

If you forget an eligible deduction or credit on a past return, it may not be too late. You can amend specific lines on past returns up to 10 years.

4. Claiming ineligible expenses

Although we discussed claiming all the credits and deductions you’re entitled too, many taxpayers accidentally claim deductions or credits that don’t exist or, they try to claim deductions that don’t fit the criteria.  For example, moving expenses are often filed incorrectly. Taxpayers who moved more than 40 kilometers away for a new job, to start a new business, or to attend full-time schooling, are eligible to claim a number of moving-related expenses like moving company bills, storage, travel and even legal fees. However, many taxpayers claim expenses that don’t fit the criteria like home staging, repairs or house hunting. 

5. Not realizing benefits are taxable 

You may have used benefits like the Canada Emergency Response Benefit (CERB) to help get you through challenging COVID-19 times. These benefits and any others you claimed will need to be declared. 

6. Incorrectly reporting your marital status

Although you and your partner may not be married, if you’ve lived together in a conjugal relationship for at least 12 months or your partner is the parent of your child, this is considered a common-law relationship. You’re entitled to some of the same tax breaks as a married couple.

7. Losing tax slips or receipts 

Most Canadians file their taxes electronically – gone are the days of mailing in receipts and slips to the CRA. However, many taxpayers don’t keep their paperwork and receipts after filing their taxes – this is a big mistake. You’re required to keep seven years’ worth of paperwork (including receipts) on hand. If you cannot supply them when requested, the CRA will deny your claims. It’s also important to ensure the dates on your receipts are correct to support your claims.

If you have misplaced a tax slip, you can either ask the issuer for a copy or view your slips online using the CRA My Account service.

Avoiding these common errors will help save you time, avoid possible penalties and ultimately help maximize your return. But, what happens if you’ve made an error on a past return?

You’ve made an error on your taxes, what now?

If you’ve made an error, you’re not alone. Filing taxes is complicated. With ever-changing rules, credits, deductions and laws, mistakes are bound to happen. Here’s how to correct a return after you’ve already filed it: 

• Don’t file another return for that year.
• Wait until you’ve received a notice of assessment before making changes.
• You can only request a change to a return filed in the past 10 years.

• After you’ve received a notice of assessment, you can request an adjustment to a past return by using the change my return service. You’ll immediately be able to see if your refund or amount owing has changed. Or, you can mail a paper T1-ADJ T1 Adjustment Request form with any necessary supporting documents. Due to COVID-19 delays, paper adjustment requests take approximately 10 to 12 weeks for processing.
   

How to get your taxes right the first time

Beyond avoiding the common errors we’ve outlined, there are several steps you can take to help make the return process easier and more accurate: 

• Be organized – keep all your slips and file them when you’re done
• File your taxes on time by starting your return early
• Used certified tax software – CRA has compiled a list of tax software with free and paid options available
• Hire a tax professional – a tax professional can help you take advantage of benefits you may be eligible for, help avoid errors and can review past returns to identify previous errors or missed opportunities
• Check the CRA’s popular question and answer page for any additional questions you may have
   

How can I help? Contact me to discuss how I can help you get organized for tax season.