With 2018 drawing to a close many people have started to plan financially for the year ahead. To close out 2018 the last thing left to do is file your tax return. The CRA is open to accept efiled returns as early as February 18th which means it’s not too early to get your ducks in a row. You might be wondering whether or not you should consider filing early, and how you can go about doing that.
- If you’re in a refund position. If you’re like many Canadians you’ll find yourself getting a tax refund on or before April 30th and those funds received back from the government make it into our 2019 financial plans. You can use a calculator as a rough guide to determine if you’re in a refund position which may entice you to get your money back from the government sooner rather than later. Getting your hard earned dollars back in your hands may allow you to pay down debt that’s charging you a high interest rate, lowering the overall amount that you’ll pay over the course of the loan. If you have no debt you might think of investing your refund to earn a higher rate of return setting your futureself up for success.
- If you have no income. If you find yourself in a position where you haven’t earned any income for the year, you should still aim to file your return as early as possible. You may be entitled to benefits such as the climate change rebate, GST rebate, or other subsidies you weren’t aware of. These are driven off your tax return for the year so it’s important to stay compliant and file your return!
- If you’re going to owe and can’t pay the entire bill. If you find yourself in a position where you are going to owe the government a lot of money and don’t have the means to pay it all by April 30th, it can be beneficial to file early. This will allow you to set up a payment plan with the government before the due date of April 30th, which may decrease the interest and penalties incurred.
What do you need to do to file early?
Collect your slips & compare to last year
The first step is to ensure you’ve gathered all your forms. Your T4 will be available by the end of February but slips such as T3’s may not be available until the end of March. This being the case it’s important to compare what types of slips you had last year and what you have this year. Barring any large financial changes in what you’ve done over the year, or what you’re invested in you should have most of the same slips as you did the year before, or at the very least an explanation as to why you do not have that slip this year. If you’re unsure if you will be receiving a slip you can call your financial institution to find out. As a double check it’s always a good idea to login to CRA online to see that you’ve included all the slips in your return.
Find a free online software
There are a number of online tax softwares out there when it comes to filing your return. Do your research, depending on the complexity of the return to find the lowest cost alternative. If you have a medium to low complexity return there is no reason you can’t file your taxes yourself. Most online software systems will automatically import any information that has been sent to CRA right into your tax return! Minimizing the amount of work you’ll be required to do.
Ensure you have all your documentation
Regardless of whether or not you’re filing early it’s always important to have the proper documentation to back up your claims. For example, if you’ve claimed a number of donations it will be important to make sure you have those receipts incase the CRA asks. In some situations refunds can be held while they are waiting for you to provide documentation so it’s always best to have it on hand.
Efile and save the trees
The quickest way to have your return processed and your refund on your way to is by efiling your return. Doing so will automatically transmit your information and your return to CRA so that you have the ability to check on the status in realtime. In addition to this your refund will be paid quickly if you set up automatic banking, allowing the CRA to deposit your money right into your bank account!
Happy tax season!
About the Author
Janine Rogan is a personal finance educator and CPA based in Calgary Alberta. She is passionate about sharing her financial knowledge with Canadians to help educate them to make money-smart decisions. Through her website, Youtube channel, and community engagement Janine shares solid financial advice that will make a difference in how you manage your money. Check out JanineRogan.com for more details.