Common Mistakes People Make When Filing Their Taxes
Filing taxes can be very stressful and daunting due to the intricacies and complexities involved. While you can’t avoid or skimp on the process of filing taxes, you can make the procedure more manageable by enlisting the services of a tax accountant to assist you with it.
Moreover, a professional will be updated on changing tax laws, give expert and experienced advice, provide tax guidance throughout the year, and steer you away from mistakes that could otherwise cost you thousands of dollars. To help you understand and avoid errors that could potentially lead to an audit, Can-Am CPA Professional Corporation has compiled a list of the most common mistakes people make when filing their taxes.
1. Claiming items they shouldn’t be
Clients often believe they are entitled to a certain claim or deduction based on something they heard, saw, or read. While the information may be correct, it may not apply to their situation. Being fully informed is key to not be audited or answering an audit should it arise.
2. Not claiming things they should be
We commonly get clients that say to us: “I didn’t know I could claim that!” Taxes are complicated nowadays, and staying current and informed can be exhausting. By opting to work with an accountant, you don’t have to worry about staying on top of the taxation rules and regulations. It is our job to do that for you.
3. Not seeking professional advice
Seeking professional advice is an essential aspect of being informed and not paying the CRA more than you should. Every year, CRA introduces new rules and regulations that are commonly missed to the untrained eye. Steer clear of such a situation by enlisting the services of a professional accountant.
4. Employment expenses
Claiming expenses that you incurred for your employment requires approval from the employer via the CRA form T2200. Once this is signed, the employee can claim the expenses on a T777 form. Important note on auto expenses, you must keep a detailed logbook outlining where you went and the kilometers it took to get there. You will also need the total number of kilometers at the beginning and end of the year. Leaving your home to your first appointment and leaving your last appointment to go home, don’t count.
5. Over contribution to RRSP
When contributing to your Registered Retirement Savings Plan (RRSP), you must contribute at or lower than your limit. Over contribution can lead to expensive penalties by the CRA. Work with an accountant to ensure that you don’t contribute excessively to your RRSP.
6. Not declaring the sale of your principal residence
In general, selling your principal residence in Canada is tax-free. However, there are some rules when you occupy two residences, such as a cottage and a home, and it is vital to report the sale of your primary residence. Again, the penalties are severe if you don’t.
To avoid these and other mistakes related to taxes, reach out to Can-Am CPA Professional Corporation. We have a total of forty-five years of experience in accounting. We are committed to helping our clients by reducing the amount of taxes our clients owe by claiming all the credits and deductions that they are entitled to. We leave no stone unturned when navigating our clients through the complex tax system. Our accounting, tax preparations, tax planning, payroll services, and bookkeeping services are available to clients across Toronto, Pickering, Ajax, Mississauga, Brampton, Vaughan, Woodridge, and the surrounding areas.