Tax Advice for Last Minute Filers and Procrastinators

If you have filed your tax return, you are entitled to thumb your nose at those of us who are still trying to get it together.  Given that the deadline to file your tax return is imminent, you should probably drop what you are doing right now and make it happen.  For the majority of taxpayers, the stress of having to file your taxes far outweighs the actual complexity of completing the tax return itself, particularly when software is available for even the most “numbers challenged” individuals.  And for those who really don’t want to do it themselves, there are tax preparation offices everywhere that are just a google search away. 

The tax deadline, in case you live in a cave and have not heard, is April 30th.  This means that your return must be filed by this date to avoid interest and penalties.  However (there are always exceptions) note that:

 

  • Self employed individuals and their spouses (who do not have to be self employed) have until June 15 to file their returns.  You are required to pay any balance due by April 30th after which interest will accrue at an annual rate of 5% of the unpaid balance.  Of course, if you haven’t prepared your tax return, you don’t really know your balance due.  In these cases it is best to estimate how much you owe and remit the appropriate amounts, so as to reduce your interest burden. 
  • Since interest and penalties are levied on balances due, you will not be penalized if you have a refund.  Of course if you have a refund, it is best to file your tax return as soon as possible as money in your hand is much better than in a government coffer.
  • If you do not fall under one of the above two categories, and you are not able to file your tax return by April 30th, you should still send a payment for the amount that you estimate that you will owe.  Although penalties and interest will still apply, it will be based on a lower base (or nil if you overpay)

 

You might think that because you only have a T4 slip or perhaps nil or very little income at all (this particularly applies to students) that it is not necessary to file a tax return.  This is a mistake as all taxpayers who earn less than a certain amount are entitled to a GST Credit (and solidarity tax credit in Quebec).  Additionally, if you had some (earned) income, you are entitled to a working income tax benefit, which will result in a refund if you are under a specific threshold.  You should also file a tax return in order to start building RRSP room (which you will need when you start to make lots of money) and if applicable reflect your tuition and education amounts so that you can use them in the current or future years.  There are also other deductions and credits that you might be entitled to, so the couple of hours that it takes to prepare the return (or have it prepared) is usually worth the refund that you might receive.  Finally the deductions taken from your paycheque are often not calculated exactly by payroll software, which can result in a small balance payable or receivable.

Payments can be made online through bill payments or by cheque.  If you are unable to pay your entire balance, you should still file your tax return by April 30th to avoid penalties (interest will still apply).  If you find that you won’t be able to your balance within a couple of weeks, you should contact Revenue Canada and/or Revenue Quebec and work out a payment plan.  They tend to be quite understanding, but it is extremely important that you communicate with them!

Don’t be afraid to use tax software, which has made it extremely simple for simple tax returns.  Ufileand Turbotax are perhaps the most popular and are very reasonable.

To avoid being a late filing procrastinator in the future, the fix is quite simple.  Have a designated area – a box, a file, a drawer, an accordion folder where you put all your tax related paperwork.  You don’t even have to look at it until next year (perhaps a little earlier than April 20th) , but then everything is in one place and can be conveniently dropped off to your tax preparer.

Finally, ensure that you are claiming all the deductions that you are entitled to and reporting all of your income.  If you had a side business or own a rental property, it is important to keep track of all revenues and expenses and report these accurately. 

Getting your taxes done, while a chore and a hassle, doesn’t have to be that stressful.  A little bit of filing during the year and a couple of hours on a rainy weekend is all that many taxpayers need to complete their returns.  And who knows – there may be a happy refund surprise at the end of it.