Filing a tax return for many people can be overwhelming, however it can feel especially difficult when you’re young filing your first return. You must file a tax return if you’ve earned income during the year, or are entitled to any credits, such as the GST/HST credit, or may be getting a refund. The following tips will help make your transition into adulthood much less stressful.
Collect Your Tax Documents
Any company you worked for during the year should send you a T4 stating the income you earned, and the income tax, CPP and EI deducted. Whether you worked one day or the entire year, if you didn’t get a T4 by mid-March then you need to go back to your employers and find out why. Did you move during the year? If so, you should’ve let all employers know. If you were self-employed, you may or may not get a T4A, so keep track of any self-employed income you made during the year.
Ensure that you have all your financial documents for the year in one folder and keep those safe until you’re ready to prepare your tax return.
Dependent College Students
You tax situation could get a bit harder if you’re a college student, and your parents support you as well. Your parents can claim you as an independent and claim part of your tuition on their taxes, they’re paying for it anyway. You can claim what you need to on your taxes, however, you can transfer (up to $5,000) to them as a deduction on their taxes. Your parents more than likely have the higher income, so it makes sense for them to get the deduction. You need to talk to your parents about your intentions before anyone files their taxes.
File Electronically and use Direct Deposit
Canada Revenue Agency prefers you to file electronically (Efile®) and use direct deposit. Returns that use Efile® get processed much faster than via paper, and direct deposit is way faster than getting a cheque. If you Efile® and use direct deposit you can have your refund within 10 business days as opposed to paper and cheque which can take up to 8 weeks. Depending on the complexity of your tax return, you may have to buy tax software to do this or hire someone to do it; the investment is usually worth the time savings. The advantage to using software or a tax preparer is that they may uncover deductions you didn’t realize were possible.
There really is no reason to file a paper return anymore, unless you’re required by CRA.
File by April 30th.
You need to file and pay by April 30th for the preceding tax year. If you Efile® ensure you file by midnight on April 30th to avoid a penalty. For paper filing, the postmark must be for April 30th, otherwise, it’s considered late. If April 30th falls on the weekend then the due date becomes the following business date, usually Monday. CRA does not give extensions for filing, other than for self-employed individuals of June 15th; if you owe then it must be paid by April 30th. You should file your return on time even if you can’t pay the balance owing right away. CRA charges a penalty of 5% plus 1% per month up to 12 months that a return is past due.
Filing your taxes is not the most enjoyable process, but don’t rush it as you could make careless mistakes. This could cost you in missed refund opportunities, penalties, or other attention from CRA you don’t want. As this is your first time filing, you may want to have a parent or other older adult look over your return, especially if you’re not using software or a tax preparer.
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