It is that time of the year again, you are getting ready and gathering information to file your income tax returns. If you are a procrastinator, or not particularly organized, this time can be very stressful. Whether you prepare your returns by yourself or have them prepared professionally, you will still need to gather all the necessary information in order to proceed.
To avoid troubles and make this process easier, here are some general tips to follow:
- Create a set of files. This can be a large set of envelopes, a large multi-pocket accordion folder, or the computer system that you are the most familiar with. Name your files based on all the receipts that you have:
– Income, RRSP Contribution Receipts, Non-registered Account Receipts, Charitable Donations, Expenses, Deductions, Medical Bills, Taxes, Child Tax Credits, Educational Expenses, Child Care Expenses, Insurance, Taxes, etc.
- If you are a small business owner, freelancer or have other side income, you should keep the business income, expenses, and deductions separate from your personal information.
- Review your tax returns from previous years to familiarize yourself with the information that was used to file those returns. For most people, the changes from one tax year to the next are not that significant, if any. This will help you to establish a system that you can follow year after year.
- Gather all the receipts and records and file them using the filling system you created. Maintain your filling system every year. The best way is to store your receipts and documents in the proper file as they arrive throughout the year. That will make this time of year much easier.
- Choose a tax preparer that you can trust and feel comfortable with. The tax preparer should have the proper knowledge that suits your particular situation. If you are using DIY software, educate yourself on how to use it and make sure you are using the latest version.
Keep All Receipts and Records & File and Pay on Time