Death and taxes. If you wait until next April to think about the latter, the experience can be a whole lot like the former.
A little thought and preparation now can save you time and money in the new year. Here are some proactive tax tips from Cleo Hamel, senior tax analyst for H&R Block Canada.
Check your pay stub
Direct deposit is convenient but errors can affect your tax situation. Look at your monthly deductions. Chloe has seen mistakes ranging from arithmetic errors to taxable benefits not shown and moving expenses paid out incorrectly.
Check your interest earning investments
Some banks don’t issue T5 slips for $50 less in interest earned. And some don’t provide tax slips for trades so you could be missing tax deductible investment expenses. Use your own records to list interest income and investment expenses.
Check the charity
Before donating money this holiday season contact the Canada Revenue Agency to ensure that charity is properly listed. Hamel notes there have been reversals of charitable contributions by the CRA in the past few years.
Check on your health
If your family has known medical expenses such as braces or glasses coming up, you could get a bigger tax benefit by loading them all into one year.
Check your investments
Even though the market has risen nicely since the 20089 meltdown, many still have losses. Selling a losing investment (only those outside RRSPs and RRIFs qualify), provides a capital loss that can be carried back three years or carried forward indefinitely to reduce tax on capital gains.
Check the move
Provincial taxes are based on where you reside as of Dec. 31. Depending on the tax rate it may be worthwhile to speed up or defer your move to a different province.
