April is here again, which means Canadian tax season is upon us. If you’ve been really on top of your finances and taxes this year, then you’re probably feeling pretty good right now! But if like most of us, you haven’t done your taxes yet, we’re here to help.
The first step in filing your taxes is deciding if you want to physically mail in your paperwork or if you want to file taxes online. Depending on your status and your situation, you may even be eligible to file your return over the phone. We recommend filing digitally since it is more secure and happens much faster than any of the other options. Services like TurboTax Canada or Simpletax can help you do this easily.
Make sure you double-check any tax cuts and benefits that apply to you based on all of your statuses. This includes if you’re a student, a senior citizen, part of a couple, indigenous, a parent and more. Again, online tax services like TurboTax will prompt you to check these boxes if they apply automatically.
Most Canadians received government aid during 2020 because of the COVID-19 pandemic, whether it was from the Canadian Emergency Response Benefit (CERB, the Canadian Emergency Student Benefit (CESB) or another source. Most of these need to be factored into your income tax for Canada and reported on your taxes as well, but not all of them do. Make sure you remember to factor these sources in when putting together your income.
If you contributed to an RRSP, this gives you a slight tax break and can result in a larger tax return for 2020. These contributions must have been made prior to March 1, 2021, so make sure you add up any contributions before that date and factor them into your final calculations. Every little deduction helps.
Another deduction that many people forget to count is a home office claim. Like many Canadians, Remitbee employees included worked from home during the pandemic in 2020, they are eligible to claim their home office space. The CRA has a temporary flat-rate deduction of $2 per day with a total of $400 for the year.
To be eligible for this deduction, you must have worked at home for at least 50% of the time for four or more consecutive weeks in 2020.
Lying on your taxes may save you money in the short term, but it is likely to cost you way more in the long run. The CRA has a number of ways to double-check your income, so be sure, to be honest when reporting numbers on your tax return and keep all relevant documentation in case you get audited.
Tax deductions tend to be standard amounts, like the $2 per day for home office, or a set amount per dependent in your household. Tax credits tend to be refundable amounts or non-refundable deductions. Make sure you look up which tax credits apply to you and claim those that are appropriate. Every small amount adds up when calculating federal income tax for Canada.
While you likely can calculate your taxes on your own, there are a large number of affordable online services that get the job done quickly and easily. Using software like TurboTax helps ensure you don’t double claim any income or deductions or miss a credit that can save you money. It also helps you get all of your ducks in a row in case you do get audited.
Now that you’ve done all of the hard work of actually putting together your tax return, take a few minutes to analyze your taxes. Look at your annual income and expenses and see if there are any changes you can make to save money or get more credits next year.
If you are sending money transfers or converting CAD to other currencies, you can even look at Remitbee’s online money transfer service and currency exchange services as a way to save in 2021. We offer competitive rates with fees that are often as low as $0.