With a new year comes a fresh tax season, so why not take steps now to plan and organize your tax files in advance? We all know people who put off filing their personal income taxes each year because they don’t have time, it’s too stressful or they can’t find the bills and receipts required to file.
Why not simplify your life and start an organized tax file each January? As you collect receipts, give charitable donations and receive your annual property tax assessment, why not file them in a tax folder for 2016 right away? Think of the time and stress it will save come tax season, when all your documentation is conveniently filed in one place.
Here are a few tips and reminders of the documents you should be filing to support your income tax return in March:
1. Charitable donation receipts:
If you are donating money to any registered charities in 2016, file the official donation receipt sent to you by the organization. To see if you are eligible for the charitable donation tax credit, try the donation calculator on the Canada Revenue web site.
2. Own a rental property? Keep your property tax assessments:
You can deduct the property tax assessed by your municipality for any rental properties you may own on line 9180 of your tax return. Make sure to file the annual property tax assessment sent out by the municipality at the end of each calendar year as documentation to support your claim.
3. Work from home? Keep track of expense claims for your home office:
You can deduct expenses you paid for the use of a work space in your home, such as a portion of the cost of electricity, heating, maintenance, property taxes and home insurance (you will need to support these deductions with copies of your monthly bills).
4. Have investments? Keep track of your gains and losses:
Interest and other investment income must be reported.. Report your gains or losses in Canadian dollars. If you need detailed information on how to report your capital gains or losses, see Completing Schedule 3.
5. Have a child in college or university? Keep all education expense receipts:
The tuition, education, and textbook amounts allow you to reduce any income tax you may owe. Your educational institution will provide you with a slip that has the total eligible tuition fees paid as well as the months you were enrolled either part-time or full-time. If you are claiming educational expenses, attach a completed Schedule 11 with your income tax return and keep all the official receipts.
6. Medical expenses that aren’t covered by insurance:
All medical expense claims must be supported by proper receipts indicating the purpose of the payment, the date of the payment, the patient for whom the payment was made and the name of the doctor or service provider. To determine the amount of eligible medical expenses you can claim enter the lesser of: three per cent of your net income or $2,171.
7. Have a child in daycare? Keep all child care expense receipts:
Use Form T778, Child Care Expenses Deduction to calculate your allowable amount of child care expenses. The individual or organization that received the payments must give you a receipt showing information about the services provided. When the services are provided by an individual, you will need the social insurance number of the individual. The receipt can be in your name or that of your spouse or common-law partner.
8. Do you have RRSPs? Keep receipts for contributions or withdrawals made:
An RRSP is a retirement savings plan to which you or your spouse or common-law partner contributed. Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you will have to pay tax when you withdraw payments from the plan. This income will be shown on a T4RSP, Statement of RRSP Income slip.
9. Did you have to move for a new job? Keep your moving expense receipts:
If you move within Canada, your moving expenses might be an allowable tax deductible. You must be employed, and your new location must be at least 40 kilometers closer to your place of work. Starting a business would qualify, as would moving away from home to take your first job. Eligible expenses include hiring movers or renting a van to move yourself, breaking a lease, furniture storage, meals and lodging for you and your family while traveling and legal fees and real estate commissions if you have to sell your home.
10. Keep your receipts from all sources of income earned:
Employment income can consist of amounts you receive as salary, wages, commissions, bonuses, tips, gratuities, and honoraria and is shown in box 14 of your T4 slips. In addition keep all receipts from money earned selling services or products to others including online sales, home-based business income, and any money you collect from someone renting out a room in your home or investment property.
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