Your life coach may continually advise you to stop sweating the small stuff.
But as a certified tax preparer speaking to you in the middle of federal income tax reporting season, my advice is dramatically different.
In fact, the more you do sweat the small stuff, the more likely that your tax preparation specialist can get you every possible dollar of your allowable refund.
Most people know by now that showing up at your accountant’s office with a shoebox full of receipts, or sending the on-line equivalent of a scanned scrabbled collection of paperwork to your on line accountant is not the best policy.
When solid reporting of your income and expenditures depends on your remembered explanations, items are not properly categorized and a lot of things go missing, and you aren’t going to get the results you want.
It is part of our Canadian culture that as a nation we absolutely love our tax refunds, but as a people, we hate keeping the careful records and reports to guarantee we get them.
The bottom line on getting the biggest legitimately allowable tax refund is to claim a deduction for every single expense that falls into any category that can be claimed. You cannot be expected to know every possible angle of every tax requirement, but if you carefully maintain your receipts in specific categories, your tax specialist can figure it out for you.
They will not make guesses for you. You have to give them the proof that expenditures have been paid, and they will use their expertise to apply them to claimable categories.
If tax time is torture time for you, you are doing it wrong. All you have to do is set up a series of relevant files at the start of each year, and toss the appropriate receipts into the appropriate files at the end of each day, week or month. If you wait longer than that, you will start to forget things.
Your files can be simple categories such as Work Expenses, Household Expenses, Childcare Expenses, Medical Expenses, Investments and Expenses, Professional Services Expenses, and Special Project Expenses. Break the latter down into categories like Home Renovations if they are happening that year, or Moving Expenses if you are doing that.
If you are self-employed or own your own business, you will also have to keep separate files related to your business.
You don’t need an elaborate system; in fact, the simpler the better. Just make sure it is workable for you. You need to stay organized.
Remember to keep your receipts in a yearly collection of those files once tax season is done. Under the Income Tax Act, the Canada Revenue Agency has three years from the date of your Notice of Assessment to conduct an audit or reassess your return.
Get the help that you need. Unless you have special training, hiring a professional tax preparer just makes sense and it allows you to claim their fee in next year’s allowable expenses.
If you want specialized service custom-designed to your needs, but don’t have time to go for face-to-face visits and wait in lines at tax service locations, consider joining the growing percentage of Canadians now using on-line services such as Piligrim Accounting Inc. We can also set up bookkeeping procedures for you that will allow all your key receipts to be kept in the Cloud so you are protected from losing them if your storage facilities falls victim to a flood or fire.
On-line tax service providers can file your returns electronically, advise you how to pay electronically if you owe the Canada Revenue Agency money, and obtain your greatest allowable refund which can be directly deposited into your bank account.
If we discover allowable claims that you have been missing, don’t forget that you can recover those lost tax refunds by filing an adjustment against your returns for a period of up to ten years.
Certified professional bookkeeper and certified tax preparer Elena Ivanova is managing director of Piligrim Accounting Inc., a national accounting and tax preparation service based in Richmond, Ont. You can reach her at info@piligrim-accounting.com.
