Navigating through your personal tax return can seem daunting, but understanding the basics of your draft return is crucial to ensuring accuracy and maximizing your tax benefits. This guide is designed to demystify the process and highlight essential areas for your review. By taking an active role in examining your draft return, you can help us ensure that all information is correct, complete, and optimized for your financial situation. Remember, a thorough review is vital to a smooth tax filing experience.
Essential Areas to Review Before Approving Your Tax Return
Check your personal details: Ensure your name, social insurance number, address, and other personal details are correct and up to date. Any discrepancies here can lead to processing delays or issues with your tax file. (page 1 of the Income Tax and Benefit Return)
Verify all income sources: Review all listed income sources, including employment income, investment income, and any other earnings. Make sure every income source is reported and matches your records. (Line 15000, page 3 of the Income Tax and Benefit Return)
Self-Employed: T2125 – Confirm all business income and expenses are accurately reported.
Employment Expenses: Verify that the T777 form lists and claims all work-related expenses not reimbursed by your employer.
Understand your deductions: Look through the deductions claimed on your return, such as RRSP contributions, childcare expenses, and educational expenses. Verify that these amounts are accurate and that you’ve provided documentation for each. (pages 5 & 6 of the Income Tax and Benefit Return)
Examine tax credits: Tax credits, including charitable donations, medical expenses, and education-related credits, should be carefully reviewed. Ensure you’re claiming all eligible credits and that the amounts are correct. (pages 5 & 6 of the Income Tax and Benefit Return)
Review your balance: Understand whether you have a balance owing or are due for a refund. If the result surprises you, it may warrant a second look at the inputs to ensure everything was captured accurately. (line 167, page 8 of the Income Tax and Benefit Return)
Review carryforward amounts: If applicable, review any carryforward amounts, such as capital losses or tuition credits. These can impact your tax situation significantly. (Summary of Carryforward Balances – Federal – 2023)
Check for accuracy in dependents’ information: If you have dependents, make sure their information is correctly entered and that you are claiming the appropriate credits and benefits for them. (Child Care Expenses Deduction for 2023)
Foreign Property Ownership: Confirm that you did not hold foreign property with a total cost of more than CAN$100,000 at any time during the year. This includes any real estate, bank accounts, or investments located outside of Canada.
Principal Residence Disposition: Ensure that you did not dispose of a principal residence at any time during the tax year. The sale of a principal residence must be reported to claim the principal residence exemption from capital gains tax.
Cryptocurrency Transactions: Verify that you did not hold, trade, or exchange any cryptocurrency. If you did engage in cryptocurrency transactions, these need to be accurately reported, as they can have tax implications.
Bare Trust Filing Requirement: Confirm that you did not have a filing requirement for a Bare Trust during the tax year. A Bare Trust arrangement needs to be disclosed under certain conditions.
First Home Savings Account (FHSA): Check if you opened one or more FHSAs in 2023 and whether you made any contributions, transfers, or withdrawals. The introduction of the FHSA and any transactions within it could affect your tax obligations or entitlements.
Final Steps
In addition to the above areas, we strongly advise reviewing the Two-Year Comparative Summary – Federal – 2023. This summary provides a side-by-side comparison of your tax data over the last two years, offering valuable insights into changes and trends that could affect your tax situation. It’s an excellent tool for catching discrepancies, understanding your financial trajectory, and planning for future tax years.
Once you’ve reviewed these sections and are confident that everything is accurate and complete, you’re ready to approve your tax return. If you have any questions or concerns, it’s crucial to address them before final submission. Our goal is to ensure your tax return is prepared accurately, taking advantage of all available tax-saving opportunities.
By reviewing your draft personal tax return carefully, you’ll ensure compliance with tax laws and optimize your financial outcome. We’re here to guide you through this process and answer any questions you may have.
