By Caroline Battista, H&R Block
Special to the Financial Independence Hub
With the start of the New Year, it’s good to take a few moments to prepare for tax season and ensure you are not leaving money on the table. It doesn’t need to be as stressful as many may think – planning goes a long way. Ask yourself a few simple questions that will help you get ready and ensure that 2016 is your best tax season yet:
Are you organized?
Keep all potential tax paperwork in one place so you can easily find it. If you are missing a receipt, request a duplicate now: don’t wait until April to start finding things. If you moved this year, then now is a good time to notify your bank and past employers so tax documents arrive at the right address.
Most Canadians receive their T-4s in February, but other documents such as tuition and education receipts, transit passes, medical receipts and stock transaction receipts come throughout the year. You may also have RRSP contribution slips, childcare expenses and charitable donations. If you are expecting other income slips to come in 2016, set calendar reminders now.
Did you experience life changes?
Did you have any major life changes in 2015 such as buying or selling a home? Did you get married, retire or experience the passing of a loved one? Many significant life changes can have tax implications so it’s important to research how they will affect your return and what is available to you.
How much did you really make in 2015?
Did you cash in some of your RRSP? Did you sell or rent out your home? Do you work in a cash intensive industry like retail, hospitality, residential construction and renovation? Know your earned income so you know what needs to be declared and whether or not any tax has been withheld.
Did you make any charitable donations?
You receive a 15 per cent federal tax credit for your first $200 of donations and 29 per cent for any amount over. Once you add in provincial credits, your tax savings could be between 40 and 50 per cent. Regardless of how much or how frequently you contribute, save your receipts because they can add up quickly, especially if you end up combining your donations with your spouse or partner.
And, finally, the First Time Super Donor Credit can be a good program if it’s been a while since you last contributed to your local charity, or if it’s your first time.
Did you take care of yourself?
Medical expenses are often some of the most missed credits each year, so familiarize yourself with the eligible expenses list. While it’s quite lengthy, it is a good resource for knowing what can be claimed and deducted. You can get a tax credit on a number of medical expenses — including prescription drugs, eyeglasses, dental work, laser eye surgery and even buying gluten-free bread or medical marijuana. In 2014, new items were added to the list of eligible medical expenses: the cost of service animals used to help manage severe diabetes and the cost of mental or physical therapy for persons eligible to claim the disability tax credit. Again, start tracking things now. If you think you are missing prescription receipts you can ask your pharmacy for records.
Don’t wait until it is too late.
Waiting until April 2016 to try and reduce your 2015 tax bill is too late. Waiting until the last minute to get organized and start filing can lead to mistakes, missed opportunities, and a lot of stress. .
By getting organized now, you will give yourself the best opportunity to learn about, and identify the credits and deductions you can claim. This will lead to the best chance of paying the least amount of tax.
Caroline Battista is a Senior Tax Analyst at H&R Block and the company’s national spokesperson.