The #1 way to find new money this fiscal quarter could quite possibly be through filing your tax return. It is the most significant transaction of the year for millions of Canadians and yet millions of unsuspecting taxpayers leave thousands and thousands of dollars on the table over a lifetime of erroneous tax filing. If you are ready to reverse that trend for yourself and your family, now is the time to jump in and learn more about how to pay only the correct amount of tax—and not one cent more!
Where to begin? Often that’s with your prior filed returns. Thankfully, the Canada Revenue Agency (CRA) allows corrections to errors and omissions for a ten year period. For example, in calendar year 2011, one can go back and adjust prior filed returns for tax years 2001 to 2009. So as you get to know more about your taxes, keep that tax tip in your hip pocket. You may in fact be able to recover thousands by adjusting those returns.
Tax sleuthing is a “nickel and diming” game, so know that the devil is in the tax details—small and large. In my experience, the most missed tax deduction is the safety deposit box, found on Schedule 4 of the tax return. If the cost is $75 a year, over ten years, that safety deposit box produces $750 in deductions and at a marginal tax rate of 40%, you’ll save $300 on your taxes—$30 a year—enough for Friday night pizza in most communities.
Moving expenses are also often missed, and they can be much more lucractive. That’s because real estate commissions—which can run into five figures—are included in the deduction, which is available if you moved at least 40 kilometers closer to the new work or self employment location and had income there. Assume those commissions were $20,000; at a 40% marginal tax rate, that’s worth $8000 to you. That might pay your legal fees, or some of the landscaping costs.
The most lucrative non-refundable tax credit, on the other hand, is the Disability Amount, available for those who are markedly restricted in their daily living activities by a disability. This can also be transferred to their supporting individuals in some cases. That credit is over $7000; a percentage of which will offset taxes payable. This is approximately $1500 in real money, depending on your province of residence. Missing this amount over a ten year period—and many families do—leaves you $15,000 short. As you can imagine, this can go a long way to help those needing extra medical or home care throughout a period of chronic illness.
There are many more tips and traps to know, depending on your personal and family circumstances. It’s fun to “drill down” and find out more by taking a tax literacy IQ test, a feature of my new book, Essential Tax Facts, 2011 edition. I hope you will pick up a copy to begin your tax sleuthing journey.
It’s Your Money. Your Life. You deserve to pay the least amount of taxes possible.