Do You Wait Until The Last Minute To File Your Taxes?
Did you file your taxes yet? You’re not alone. More than one-quarter of Canadians — 28 per cent — find the tax-filing process stressful, confusing and even intimidating, according to a TD survey.
Most Canadian income tax returns (and balances owing) are due by midnight April 30, 2018.
I’m a terrible procrastinator and I tend to wait until close to the last minute to file my taxes. If you’re like me, and haven’t filed yet, it’s time to buckle down and get a move on it.
Here’s what you should be doing.
File your taxes online
While some people still prefer to file paper tax returns, with only a couple of weeks to go, filing your return online is the best way to get your return to Ottawa. The CRA recommends and supports this method and has a list of certified software packages and web applications that fit all situations and budgets, including ones that are free.
Register for My Account and use the auto-fill function to have parts of your return automatically filled in with information from the CRA, including information from your T3, T4, and T5 slips.
File on time
Filing your taxes on time is always a good idea, even if you’re getting a refund.
If you have no income in the year, you still need to file on time because the government will use your tax return to assess whether you qualify for any provincial and federal credits such as the Canada child benefit, goods and service/harmonized sales tax credit, or child disability payments. Plus, you want to make sure there are no delays in receiving those benefits.
If you owe money, the CRA starts charging interest on the balance one day after the deadline passes.
What if you don’t have all your information?
If you don’t have a piece of key information you need to calculate how much you made last year or have missing receipts – file anyway. The CRA won’t grant you an extension (except in extraordinary circumstances).
Instead, use a best guess of your income. You can then file an amended return once you have all the information.
What if you owe money?
Of course, the CRA makes it easy for you to pay taxes owing. There are several payment methods to choose from. Did you know you can pay your taxes online? You can pay with cash or debit card at any Canada Post outlet. Your financial institution will also take payments, including online banking – the same way you pay your phone or hydro bill, and pre-authorized debits from your account.
Related: What if your tax return is reassessed?
Many taxpayers file late returns because they owe money and don’t have the funds to pay up. If you can’t pay all the amount you owe before the payment due date, consider making a payment arrangement. If you are eligible, a payment arrangement will let you make smaller payments over time until you pay the full amount. To set up an agreement, use My Account, or call the CRA at 1-888-863-8657
It may not be too late to get professional help
Do you think a professional can swoop in and save you? A tax advisor can help you file your taxes to ensure you are filing accurately and taking advantage of the appropriate deductions. Tax preparation professionals are all working late during this time, but some are already turning away new clients, so don’t leave it too long.
The CRA is a great resource to answer any of your questions.
If you need help and have a modest income and a simple tax situation, a volunteer from the Community Volunteer Income Tax Program may be able to file your return for you. You can find a clinic near you and see if you’re eligible.
If your tax return is late, you’ll pay a hefty price
If you owe tax, your payment needs to be received by the CRA on or before the tax deadline. If you are sending your payment by mail, the envelope with your cheque in it must be postmarked by April 30.
Late filing penalties are quite steep. The late penalty is 5% of your balance owing, plus an additional 1% for each month your return is late, up to 12 months.
The CRA charges penalties on the balance you owe, so if you can afford to pay even a portion of your balance, it’s a good idea to do so, and as soon as you can.
Last year, I filed on time and got a refund. 7 months later, I got a letter saying I owed money because I made a mistake. The amount I owed was not significant but the interest was what got me calling them right away! Beware, only mistakes like typo, from 6 to 9, will not generate interest. The rest will!!!
I don’t wait to do my taxes because I get stressed if things are last minute – I’ve just always been like that. That’s interesting about the clinics that will help people with their taxes for free – a good resource for some people. At this time I file for my husband and I. Can I say that I partly enjoy doing taxes? Not the paying part if we owe, but I like getting a clear summary of our finances from the past year.
Just be aware that when paying online your financial institution may have a daily limit which may prevent you from paying your full balance in time. Mine has a daily max of $2000 and since the GST I owed was greater I had to break up into separate payments over two days. Luckily I was a few days away from the deadline but would have been dinged interest otherwise.
Thanks, sheiny. I was not aware of that. It makes it even more critical to not wait to last possible minute.
I’m a procrastinator and if I did my taxes they’d always be late. To punish myself for being a procrastinator I’ve used an accountant for years. I get a reminder email in March but the problem was I didn’t have all my tax slips. Questrade didn’t issue my T3s for ETFs and REITs until April 5th! So I got my info into my accountant a week earlier and said I was still waiting for some tax slips which I emailed to her assistant when Questrade had the PDF docs available. Thinking I’m good to go, my accountant had all my stuff, a few days later in the mail I get tax slips from Manulife! What! This is my employer’s groups RRSP and it was for January and February contributions. I thought this stuff came off my T4. Not a huge deal I’ll claim that on my 2018 taxes. But still it’s tough not to be a procrastinator when the finance companies you deal with are waiting to just about the last minute to get your tax slips to you.
Got an email from the assistant 2 days ago my taxes were done and I went in yesterday to sign and pay and she’ll e-file them for me. Sure beats the days when I drove to our Revenue Canada tax office on April 30th and handed them to the man standing in the parking lot where all the cars were lining up!
Be aware that certain forms have a daily cost for being late even if you do not owe anything. As an example the T1135 has a daily late charge of $25.