Money

Get Ready for Tax Time, Today

By Tamar Satov • •

Taxes

Your tax filing deadline is a couple months away. Small steps now will ensure your April is a whole lot smoother.

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Get Ready for Tax Time

As a baker who operates a nut-free dessert catering company out of her Montreal home, Mandy Menshick has to be as meticulous with her financial paperwork as she is with her ingredients. “It’s very important for me to be organized,” says Menshick, 48, of her business Em & Breez. “I’m a one-person show here – I don’t have time to be looking for stuff at tax time.”

Dig out last year’s tax materials and make a list of all the slips and receipts you needed for 2017; chances are you’ll need the same ones for 2018.

Her recipe for stress-free tax filing includes day-to-day sorting of all her invoices, receipts for supplies and other expenses, and any government or tax forms she receives. “As things come in, I put everything in its proper place,” she says.

Whether or not you’re self-employed like Menshick, there are many benefits to compiling your tax documents as early as possible instead of waiting until the tax deadline, says Jonathan Braun, Manager, Tax & Estate Planning at IG Wealth Management.

“Unless you have a very simple return with just a T4 slip from your employer, it’s important to get organized and gather everything you need in advance, so you can be sure to claim all the deductions and benefits you are entitled to,” he says.

Braun offers the following tips to get ahead of the game and avoid the last-minute tax scramble in April.

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    Create a checklist

    Dig out last year’s tax materials and make a list of all the slips and receipts you needed for 2017; chances are you’ll need the same ones for 2018. “As those tax slips come in, check them off your list,” says Braun.

    This process will help you see what needs tracking down — say, charitable donation receipts you got via email. “If you’re missing something and need to request a duplicate receipt, it’s better to ask sooner than later,” says Braun.

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    Take stock of life changes

    Did you get married or divorced, have a baby, start a new job or business, or open a new investment account in 2018? If so, ask your tax preparer if there are additional slips or documents you might now require. “Talk to your financial advisor to find out about any new credits you’re entitled to or if there are ones you might not already know about,” says Braun.
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    Refer to your Notice of Assessment

    The 2017 Notice of Assessment you received from CRA lists important details, including your 2018 RRSP contribution limit, carry forward information and any losses that have not yet been claimed. “You want to be sure you’re not missing out on claiming those deductions,” says Braun. “Plus, you always have 60 days after year end to use any remaining RRSP contribution room and claim that deduction right away.”
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    Think strategically for medical expense claims

    Did you know you can claim out-of-pocket medical expenses for any 12-month period ending during the tax year, not just the standard calendar year? “If, for example, you had a large dental bill in November 2017 and didn’t already claim it, you can claim medical expenses for the 12 month-period ending in October 2018 on this year’s return,” says Braun. He suggests asking your pharmacy for a printout listing all the prescriptions you got during that 12-month period. “The pharmacy statement will usually even provide a breakdown of the total amount reimbursed by your health insurance,” he adds.
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    Go the extra mile for vehicle expense claims

    If you are self-employed and use your vehicle for business purposes, or you are an employee (such as a salesperson or management consultant) who must travel away from your place of business for work, you may be able to claim business-related vehicle expenses on your tax return. Doing so, however, requires a fair bit of record keeping. “Keep all your receipts and a logbook clearly indicating your business use including the dates, where you went, the purpose for the trip and how many kilometres you drove,” says Braun. Those who are salaried must also get their employer to sign off on form T2200 (Declaration of Conditions of Employment) to certify they aren’t being reimbursed for these expenses, he adds. If you haven’t been keeping track, start going over your bills now.
When you’re as organized as Menshick, you’ll have a lot less to do come tax time. You’ll also be less likely to miss out on important deductions. “I don’t stress out over taxes,” she says. “Which means I can stay focused on my business.”
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