Why You Should File Your Taxes on Time This Year

With April just around the corner, tax filing deadlines are coming up fast. Here's a look at why you should submit your return as soon as possible.

Don’t worry if you still need to file your taxes this year; you’re not alone. Even if you try not to file your taxes at the last minute, it’s sometimes unavoidable – especially this year. With so much else going on in the world, overlooking what could rarely be considered a fun task is perfectly understandable.

However, as we get ready to head into April, the tax filing deadline is rapidly approaching. Here are just some of the very good reasons why you should strive to file your tax return as soon as possible.

You won’t have to pay interest or penalties.

If you file late and owe the government money, the CRA will charge you interest and penalties on the money you owe, following the schedule below:

• The interest on your unpaid taxes begins to accrue the day after the deadline.
• Penalty interest begins to accrue the day after your filing deadline.
• Penalties for late filing are 5% of the tax owed, plus 1% for each full month your return is late, up to a maximum of 12 months.
• Starting May 3, 2022, the CRA will levy late filing penalties and interest on unpaid taxes.

Even if you can’t pay your owed taxes right away, you should file your return on time to avoid incurring late-filing penalties and having to pay even more. If you need extra time to pay you can negotiate that when you file.

You’ll get what’s rightfully yours sooner rather than later.

If you don’t owe any taxes, you won’t be charged any fines or interest for filing late. Nevertheless, you should still file your tax return on time to ensure that your benefit payments are uninterrupted.

Many Canadians are eligible for valuable tax-free monthly payments such as the Canada Child Benefit (CCB) and GST/HST credits. The CRA uses the information on your return to establish your eligibility for these funds. Your payments may be delayed, or you may miss out on them entirely if you do not file your return on time.

Furthermore, the earlier you file, the sooner you’ll get your refund, as well as any credits you and your spouse or dependents share.

You can help combat tax identity theft

When someone uses your personal information to file a bogus return and keep your refund, GST/HST credits, and other credits, they are committing tax identity theft. As odd as that might sound, it happens more often than you might realize, and while it’s a problem the CRA are trying hard to address, the system is far from foolproof yet.

It’s possible that you won’t realize your personally identifiable information has been hijacked until you try to file your tax return, and it is rejected as a duplicate. By filing on time, you may be denying someone else the opportunity to exploit your information first. And remember, tax fraud is usually not the only type of financial fraud hackers try once they have someone’s information, so the faster you find out about it the better.

When must I file my tax return by?

Unless you’re self-employed, the deadline to file your 2021 return is April 30, 2022; however, because this day falls on a Saturday in 2022, you have until May 2, 2022 to file.

The deadline to submit if you’re self-employed is June 15, 2022. Remember that if you owe federal taxes, you must pay them by May 2, 2022.

If you and your spouse are preparing your returns jointly and only one of you is self-employed, you can still file both forms by June 15, 2022 if any outstanding balances are paid by May 2, 2022.

Is there any tax relief this year?

You may be eligible to receive taxpayer aid in unusual circumstances (such as natural catastrophes). This means that if you can’t file your return or pay your taxes on time due to circumstances beyond your control, the CRA may cancel or waive penalties or interest. Visit the CRA website to learn more about what situations may qualify you for this relief.

If your taxable income in 2020 was less than $75,000, and you got Employment Insurance (EI) benefits or COVID-19 emergency funds, you won’t have to pay your taxes until May 2, 2022. To avoid late-filing penalties, you still had to file your return by April 30, 2021, though.

Struggling with your tax return? Not sure that you have it all right, or how to deal with issues like asking for time to pay taxes owed? Just want to make sure you are getting all the tax credits you are entitled to? It’s not too late to contact us and have our tax experts help you file your tax return, while also offering you strategies for making sure that the process will be even faster and smoother next year.