Don’t Let These Common Tax Return Mistakes Cost You Money

It's that time of the year again when you have to take out all your financial records and fill out those tax forms. The right way!

Do you want to save the most money on your taxes and avoid making the most common mistakes that people make when they file their taxes? 

Or you have already filed your tax return and just realized an error you made while doing so? Don’t worry; at K.K. Chartered Professional Accountant, we’ve listed some of the mistakes you might make when filing your tax return, as well as how to correct them.

Filing tax returns might not be as easy as it seems. It is a complicated procedure, and it’s possible to easily make a mistake on your returns. If you make a mistake, you may end up with a bigger tax bill than you expected or lose some tax benefits. Sometimes a mistake on a tax return can result in a penalty or other fees. 

Below is a list of the most common mistakes on tax returns. But if you have already made one of these mistakes, we have also included how you can fix that mistake after you have filed your return. 

Mistakes:

1. Forgetting Deductions or Credits that are Allowable

It is hard to keep track of the income tax deductions and credits that you may be eligible for year to year, especially when the government changes tax rules and offers subsidies and reliefs based on the pandemic situation. Sometimes new deductions and tax credits are added, and some are removed. Some of the tax credits and deductions that are often overlooked are:

• i. Non-refundable tax credit for interest paid on student loans
• ii. Tax deduction for union or professional dues
• iii. A $5,000 non-refundable home buyer’s tax credit for people who bought a qualifying home in the past year and have not lived in a home they or their spouse owned in the past four years
• iv. Tax deduction for any work related expenses that you paid personally.

K.K. Chartered Professional Accountant makes sure that no deductions or credits that could be used are missed or forgotten, and we can help give as much tax relief as possible.

2. Claiming Ineligible Expenses

On the other hand, some people might make the mistake of claiming deductions or tax credits that do not exist or to which they are not entitled. For example, according to the CRA, people often mistakenly claim the wrong moving expenses. 

Taxpayers who move at least 40 kilometers closer to a new job or to study full-time at a postsecondary program can deduct a number of moving costs. These include transportation and storage, travel, hooking up and unhooking utilities, and fees for breaking a lease.  But some of them include things that aren’t eligible, like repairs or the cost of moving mail. Some students claim the student loan tax credit on interest fees paid on personal loans, student credit, or foreign student loans, which are also ineligible expenses.

3. Getting Rid of Receipts and Slips

As online tax filing becomes more popular, taxpayers are not required to send in all the slips and receipts along with the returns, so they fail to keep these safe and handy. This often becomes a problem since CRA often requests to see receipts for certain entries like childcare expenses, donations, tuition fees, etc. during an audit.

Individuals are required to keep seven years’ worth of records, and CRA only accepts receipts that include the date of payment. If one fails to provide these documents, then the claim is denied. We have one of the best accounting softwares at K.K. Chartered Professional Accountant that allows you to upload a copy of your receipt to it so that there is always a digital copy available, even if you lose the hard copy.

4. Misreporting Marital Status

If you’ve been living together for at least a year, or if you live together and have a child together (whether by birth or adoption), the CRA considers you to be in a common-law relationship, which you must report on your tax return.

It is important that you report your marital status correctly to be eligible for certain benefits like the GST/HST tax credit and the Canada Child Benefit, both of which are based on spouses’ combined incomes. If you report yourself as single, you might have to pay back some of the money you receive. 

However, spouses can pool or transfer some of their tax credits. When both spouses fill out their tax returns at the same time, it can help you get the most out of your medical expenses, charitable donations, pension splitting, and other tax credits.

5. Neglecting to Transfer Unused Tax Credits to Other Family Members

Tax credits can be transferred to the spouse of an individual who does not have enough income or taxes. For example, a parent or grandparent can get $5,000 in unused tax credits for tuition that the student did not use. K.K. Chartered Professional Accountant can help you plan your taxes and give you advice about your finances all year long.

6. Missing the Tax Deadline

Here’s a quick rundown of the important deadlines to keep in mind for filing your 2023 tax return:

General Filing Deadline:

• April 30, 2024: This is the deadline for most Canadians to file their tax return.

Payment Deadline:

• April 30, 2024: This is also the deadline to pay any taxes owing for the 2023 tax year.

Self-Employed Individuals:

• Filing Deadline: If you’re self-employed (and your spouse or common-law partner), you have a later filing deadline of June 17, 2024.
• Payment Deadline: However, even with the later filing date, any taxes owing are still due by April 30, 2024.

Filing Electronically:

• • March 15, 2024 (Optional): The Canada Revenue Agency (CRA) starts accepting electronically filed returns on this date. Filing early can help you receive your Canada Carbon Rebate (CCR) payment sooner.

7. Ignoring Mistakes You Made on Previous Returns

If you have already made one or more of these mistakes on your previous returns, you can correct them rather than ignore them.

How to Change a Return

People often make tax return mistakes, and the CRA is aware of that. You can request a change to a return for the previous 10 years. You have to wait until you receive your Notice of Assessment for that return and then file an adjustment request. It is a notice issued to all taxpayers by the CRA showing how much tax needs to be paid or refunded. You must include the line numbers and figures for all the adjustments. A separate request must be filed for each year’s return adjustments. 

All necessary documents, like receipts and slips, must be included. Most online changes get a response from the CRA within two weeks, while mail changes take about eight weeks. If the adjustments are approved, you will receive a Notice of Reassessment. In the event of rejection, you will receive a letter explaining why the changes were not approved. You can object to the CRA’s decision by filing a Notice of Objection. If you plan to do so, the best way would be to let a professional handle it.

Ways to Make Changes to Your Return to Correct Tax Return Mistakes 

Online

If you prepared and filed your tax return with EFile, you can log in to your account and use the tool “Change my return” on the CRA MyAccount page. 

ReFile

You may fill out a T1-Adjustment Request Form and mail it to your local tax center.

Mail

You can also send a signed letter to your tax center with the changes you would like to make. You need to make sure that you include copies of all documents that are related to the change. 

Or you can authorize your accountant, and they will do it on your behalf.

Voluntary Disclosure Program

CRA also has a program that lets you make adjustments or changes to your previously filed returns or file a prior-year return that was not filed. This program is known as the Voluntary Disclosure Program (VDP). It is open to all Canadians. However, to file under this program:

• Your disclosure must be made before the CRA contacts you first about your tax situation
• Your disclosure must be complete, so you cannot leave anything out
• The information must be more than a year old
• The program is only for those who are facing penalties or tax charges

If you are not sure whether this program is for you or not, K.K. Chartered Professional Accountant can guide you through the process and help you file returns that have a minimal error rate. Our team consists of highly qualified and experienced tax accountants who prepare the returns meticulously, which are then reviewed in length by the senior management team so as to avoid any tax return mistakes. 

How to Avoid Making Tax Return Mistakes The Easy Way?

The simplest answer to that question is to have a professional do your taxes. If you work with K.K. Chartered Professional Accountant, you won’t have to worry about missing out on any tax credits or deductions that apply to you; furthermore, your tax advisor will be able to help you apply for as much tax relief as possible, resulting in a lesser tax burden. You can book a consultation with one of our tax accountants here.