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Common Income Tax Filing Mistakes

  1. MISSING THE APRIL 30 DEADLINE. Not a good idea. You're automatically dinged 5% of the tax owing, plus another one per cent for each subsequent month you're late filing. 
  2. FAILING TO POOL DEDUCTIONS. Take charitable donations: you get a 16 per cent credit on the first $200 donated, but 29 per cent on amounts above that. So a husband and wife may be wise to group their donations to reach the higher threshold. Similar math applies to medical costs: you can only claim the portion of expenses that exceeds three per cent of your net income or $1,755, whichever is less. A couple can pool expenses to exceed that minimum, then have the spouse with the lower income claim the expense to get the best break. 
  3. FORGETTING DEDUCTIONS. Some of the most commonly missed claims: moving expenses after relocating for work; credits for post-secondary tuition fees and for each month of attendance; and a credit for supporting a dependent relative. 
  4. NOT OFFSETTING CAPITAL GAINS WITH LOSSES. Maybe the 2008 recession of the late recent years just seems so long ago, but many people fail to offset the capital losses on their investments during those tough economic times with the recent gains as a result of the market correction. Losses can be carried forward for seven years and back for one year. 
  5. FORGETTING TO ACCOUNT FOR INTEREST AND DIVIDENDS. Financial institutions report these payments to the CRA, so don't try to hide them. And failing to note them is one of the bigger red flags for the taxman looking for audit targets.
  6. FAILING TO CLAIM EXPENSES. Two common ones people forget are safety deposit box fees and carrying charges and interest on loans used to purchase investments. 
  7. IGNORING A CHILD'S TUITION TRANSFER. Since students have little or no income, they often can't make use of their full tuition credit, and that credit room (up to $5,000) can be transferred to parents, grandparents or spouses to lower their taxable income. 
  8. BAD ARITHMETIC. This is the biggest blunder the CRA encounters. Of the 25 million returns filed in 2015, 10 million were on paper, and poor math skills were widely on display.