Wealth in Filing a Well-thought Tax Return

Have you ever thought that a regular and on-timed filing of your tax return will make you a little richer?
To do that, a well-thought, planned, researched, implemented and accurately filed of your 
personal tax return are factors to accomplish this task.

  •  Visit the Canada Revenue Agency Website or Hire a Tax Preparer

If you decide to prepare your tax return, the first thing you do is to check the CRA website or consult with your tax accountant or tax expert.

For preparing a personal tax return, there are two things you need to do right away. First, download the income tax guide for the year you are filing. Briefly, go through each line on the income tax guide. The first few pages of the income tax guide will give you information on how to file your tax return. Additionally, you will see new changes for the tax year you are filing. 

The rest of the tax guides are more detailed and can be tiresome to read. This comes to the second item that you need to check – T1 Individual tax return package. Get the package applicable to your province and territories of residency. This package will include your federal tax return, schedules, and provincial schedules. Go through each line on your four-page T1 General form and all schedules included in the tax packages; this will give you an idea, which ones of the listed items applied in your case.

Should you decide to hire a tax accountant or a tax expert, make sure you provide your personal information that has an impact on maximizing the benefits of filing a tax return. Ask for an ‘Income Tax Checklist or Questionaire,' go through it and check the ones that apply to you.

  • Gathering of T1 Information and Source Documents

Now you're ready to find all the necessary information and source documents to file your income tax return. There a few places you can find this information.

Author: Earla Riopel, BSCom(USA), DipAcc(UBC)

Surrey, British Columbia, Canada
Email: earla@earlariopel.com 

 Wealth – With Proper Tax Records Keeping

Have you ever thought why an individual, with the same lifestyle and making the same amount of income, is getting more tax refund than you do? The answer is simple.

For example, Taxpayer Y is so meticulous that each time he buys and pays something he makes a record of it. Also, he uses the following tools and tax strategy:

  • Requests for a reduce tax deducted from paycheck 

During the start of January, he files to CRA the following forms:  T1213 - Request to Reduce Tax Deductions at Source; TD1 2016 - Personal Tax Credits Return and TD1BC 2016 - British Columbia Personal Tax Credits Return; for a reduce tax deducted from the paycheck. This request is possible because he has most of the items listed in these forms.

  • Use of mobile phones and cameras

Each time he pays for something that is business or employment related or possible tax deductions and credits - found in forms: T2125 - Statement of Business or Professional Activities and T777 - Statement of Employment Expenses; he takes a picture of his purchases and receipts.

  • Bank and credit card statements

Download his monthly statements and store them in a well-labelled folders. Folder one is for ‘income earned’, and folder two is for possible ‘tax deductions and credits’.

  •  Purchases and payments without receipts

For payment that don’t have any receipt, he jots down the important information about the payment or purchase transaction. This information will include the item description, price, vendor, date and for what the purpose of the payments or purchases were. Then, took pictures and added them to his tax deduction folder.

  • Providing appropriate personal information

Personal information creates a huge impact on a taxpayer, such as marital status and having dependents. Include any new changes with the family situations, activities, work and other tax related conditions.

  •  Final check of the blank forms and schedules included in T1 tax return package

Does a final check of the T1 tax return package, making sure all line items included in the T1 General and all federal, and provincial and territorial tax schedules have been accounted.

  • Year-end services and expenses that must occur

Any possible expenses and credits on purchases and services are done or paid on or before the end of the year. These expenses can be a visit to a doctor, dentist, and refill of prescriptions; charitable contributions and allowable tuition; family activities that qualify for fitness and arts' credits; and other tax related expenses that have to occur on or before the end of the year.

  • Year-end summary of Income, tax deductions, and credits

At the end of the year, he itemizes his income earned, deductions and credits applicable to his situation by simply using a spreadsheet program, like Excel. 

Also, uses a Word program to itemize all personal information; family activities and changes of family additions; investments and business; new job duties and work conditions; and other related information to maximize tax benefits. 

Additionally, makes a copy of his two folders for income earned, and possible tax deductions and credits in a USB stick – gives it to the tax preparer. 

  • Hire a tax accountant or tax expert

Instead of doing it himself, he pays a tax accountant or tax expert to prepare his tax return for a reasonable rate. Because taxpayer Y’s information is well-organized, labeled and supported with well-documented sources, the hourly rate charged has been minimized.

Meanwhile, Taxpayer X hardly did any of the above items, just providing his T1-slip for employment and personal information to the tax preparer. He paid a portion of what a Taxpayer Y paid.

Tax accountant or tax expert will only prepare the tax return based on available information provided. Other services such as tax advice, bookkeeping and financial statements preparation are additional professional fees to the tax filer.

  • Bigger Tax Refunds

When CRA sent tax refunds to these two taxpayers, Taxpayer Y’s tax refund has multiplied many times compared to Taxpayer X. The extra fee paid by Taxpayer Y was well-worth it.

  • Increased on Investments

Every end of each tax year, Taxpayer Y has put aside a sizable amount of RRSP and tax refunds for additional savings, or repayment – in the case of RRSP contribution are financed, through borrowed investment funds.

Author: Earla Riopel, BSCom (USA), DipAcc (UBC)

Surrey, British Columbia, Canada
Email: earla@earlariopel.com

There are hidden wealth on taxes; you just need to tap into it. With all the available information out there; the help of a tax expert - a tax accountant preferably, you can increase your wealth during lifetime." ~@EarlaRiopel