8 Top Tax Filing Mistakes to Avoid

Tax filing mistakes can mean missed refund opportunities! Or it can mean an audit. If you are like most Canadians, you file your taxes yourself. It is easy enough to overlook tax law changes or other unpredictable circumstances. And then that could set you up for tax filing mistakes.Making mistakes on your tax return could cost you. So, what should you watch for? These are the 8 top tax filing mistakes Canadians make, and we will show you how to avoid them!

1. Miscalculations

Adding wrong is the most common tax filing mistake. Filing status errors, typos, double reporting, not counting tips or missing information from your T4 slips all tie for second place. To eliminate most errors, use the secure CRA Auto-fill My Return Service. It connects the information CRA has on file for you directly into where it belongs in your tax return.

2. Missing refund opportunities

Expenses and tax credits make the Canadian tax system fair for everyone. If you have eligible moving expenses or childcare expenses or you support someone with a disability, there are tax credits and deductions you may be missing. Plus, some medical devices and treatments, or other medically prescribed items not covered by your insurance are eligible medical expenses. Reading enhancements like glasses or contact lenses, and hearing aids count, too!

3. Filing and paying late

The deadline for filing your individual tax return is April 30th, and if you’re self-employed, it’s June 15th. But you still pay your taxes by April 30th, even if you’re self-employed. After April 30th, you face a 5% penalty on the balance owing, plus 1% for every month after that. Those amounts double if you were late any time in the last three years.

4. Claiming ineligible expenses and not claiming eligible expenses

  • To claim employment expenses, your employer must complete a Form T2200, a Declaration of Conditions of Employment
  • Interest expense deductions are eligible when there is a direct link between the borrowed money and your ability to earn income
  • A loan to buy investments has deductible interest. But you can’t deduct your mortgage interest, even if you borrowed money instead of cashing in your investments
  • If you move 40 km, or more, closer to work or school, your moving expenses are eligible. But you can’t claim home staging, repairs, job or house-hunting trips, storage fees, temporary accommodations, nor mail-forwarding fees
  • The interest on certain student loans is an eligible expense, once. And not student lines of credit, personal loans, nor foreign student loans
  • Tuitions at recognized educational establishments are eligible expenses. But you can’t claim extracurricular activities, books, meals, lodging, or goods of lasting value like your computer
  • Not everything medical is an eligible expense. So, some alternative health practitioners, vitamins, supplements, over-the-counter medicines, bandages, rubbing alcohol, and non-hospital beds don’t count
  • Your transit pass is likely eligible if it legibly shows your name or another identifier. Passes are only eligible for specific ages, enough trips monthly, and use without interruption.

CloudTax outlines potentially eligible expenses, so you never have to worry about missing one again!

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Infographic of 8 Top Tax-Filing Mistakes

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5. Missing valid receipts

Not sending valid receipts as requested makes any expense ineligible. The dates need to be in the correct timeframe, and the amount needs to support your claim. Always send official paid receipts, above all, never send invoices asking for payment.

6. Not reporting when you are living common-law

If you live in a common-law, filing gets you the same treatment as married couples. Then, the advantages like a tax credit for a low-income partner or saving for retirement, do involve your partner. It is a requirement to report living with a significant other, including same-sex couples.

7. Contractor vs. employee status

Some types of businesses contract individuals instead of employing them. They do this, so they don’t have to pay the employer’s portion of CPP, EI, and other employee benefits. But if there is too big a connection between the two, CRA can decide the contractor is really an employee. The employer pays penalties and interest on the CPP and EI contributions they didn’t make.

8. Not refiling if you find a mistake

If CRA rejects any of your deductions that you previously claimed, for not submitting your documentation, you can still go back and request for a reassessment if you end up finding the documentation later. You can do this up to 10 years prior from the current tax year!

These are a few common tax filing mistakes. Hopefully, knowing where most errors happen, you can avoid them on your taxes this year. To ensure you get everything you’re entitled to, CloudTax connects directly with the CRA to file your taxes quickly and easily.


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