The deadlines for filing your tax returns may seem far away, but the sooner you get it done, the sooner you can relax. Many Canadians opt for doing their tax returns themselves. However, making a mistake on your tax return can cost you dearly. So what do you need to look out for?
Here are 5 common tax mistakes Canadians make every year
5. Claiming medical expenses that aren’t eligible
With so many common health concerns in Canada, it’s a relief to know that there’s a wide range of medical expenses for which you can claim.
However, you can’t claim for everything that might seem like a medical expense. Expenses that aren’t eligible include medical practitioners – such as alternative health practitioners – that aren’t recognized by the applicable provincial authority, vitamins and supplements, over-the-counter medicine, rubbing alcohol, bandages and non-hospital beds.
4. Claiming tuition fees that aren’t eligible
The CRA says that Canadians often claim tuition fees that aren’t eligible for a tax refund. For example, they claim for tuition at education establishments that aren’t recognized. There are many things you can’t claim as tuition fees, including extracurricular activities, meals, and lodging, books and goods of lasting value that you will keep after you’ve completed your studies, such as a computer.
3. Claiming interest on student loans when it’s not eligible
One of the main reasons for paying your student loans fast is that the longer you take to pay them, the more these loans will cost you in interest. However, the CRA says you can claim for the interest you paid on certain student loans. You can claim only once and not for personal loans, student lines of credit or foreign student loans.
2. Claiming moving expenses that aren’t eligible
If you’ve moved house for work or study purposes, you can claim moving expenses if your new home is at least 40 km closer to your new work or school. However, not all your expenses in this regard are eligible. According to the CRA, you can’t claim for home staging, house hunting, repairs to the old house, storage fees near your old house, job hunting, temporary accommodation, and mail-forwarding charges.
1. Not paying your taxes on time
The deadlines for filing your tax returns are April 30 for individual returns, and June 15 if you’re self-employed. However, even if you’re self-employed, you still need to pay your taxes by April 30. If you’re late, the Canadian Revenue Agency – or CRA – can incur a penalty of 5% of your balance owing plus an additional 1% for every month you’re late.
If you’ve already paid a late-filing penalty in the past three years, you will be charged 10% of your balance owing plus 2% for every month you’re late. Whenever you feel like you’re having to pay too much in tax.
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