Once again thanks to my friends at TurboTax I have a few online codes to giveaway to some lucky readers this tax season. Thanks TurboTax Canada! I’ll draw the winners of this giveaway at random in March. To help improve your financial literacy, I had the pleasure of working with TurboTax and tax expert, writer, speaker and personal finance consultant Robin Taub.
Robin, thanks for taking the time to chat with me again this year. Last year we talked tax credits – what are some of the new tax credits folks should be aware of this tax year?
Well Mark there were several tweaks to tax credits and deductions for families with kids:
- The child care expense deduction has increased by $1,000 per child. It is now $8,000 for children under age 7, $5,000 for children ages 7 to 16, and if you claim the disability tax credit for your child, the deduction limit has been raised to $11,000.
- The children’s fitness tax credit is now a refundable tax credit. You can claim up to a maximum of $1,000 of eligible fees per child, which at 15%, creates a refund of $150 per child. Fees are for registering your kids in ongoing physical activities or classes.
- The tax credit for children under 18 has been eliminated.
- For the 2015 tax year, the universal child care benefit (UCCB) is $160 per month for each child under age 6, and $60 per month for each child aged 6 through 17. The UCCB is taxable in the hands of the lower-income spouse or common-law partner. Note that the government plans to introduce a proposal in the next federal budget to replace the UCCB with a new Canada Child Benefit.
- This may be the last year to claim the family tax cut, a non-refundable tax credit of up to $2,000 for eligible couples who live with children under 18. The government is expected to cancel it in 2016.
I suspect some people want to do more of their taxes on their own – but they’re unsure what to do or where to start. How would you suggest people get prepared for this tax season?
- First and foremost, register for the Canada Revenue Agency’s My Account, so you can view or change your tax return and notice of assessment, track your refund, and check your benefit and credit payments, as well as your RRSP deduction limit.
- If you are using certified tax preparation software like TurboTax, you can take advantage of a fantastic new secure service from CRA called Auto-fill my return, but first you need to be registered for CRA’s My Account.
- Auto-fill my return lets you automatically request and receive tax information from the CRA, such as from T4, T5, or RRSP slips at the time you are filing your return. Then TurboTax will automatically fill in the relevant sections of your return, doing a lot of the work for you!
- Sign up for direct deposit so your tax refund goes straight to your bank account. If you file online using TurboTax and CRA’s NETFILE, you may get your refund in a matter of days.
- Set up a large accordion folder and organize your receipts and slips. This includes tax information slips, as well as supporting documents like bills, credit card statements, receipts for car, home office and other business expenses, stock transactions, and housing, business and rental property records.
I would also suggest to have as much information on hand as possible when you get started, but don’t worry if you don’t have all of your tax information yet. You don’t need to finish the return in your first sitting, because when filing with TurboTax online, you can always jump in where you left off. And with the new mobile version, you can add additional information on the go, as it comes in.
Managing my own taxes is something I’m trying to get more competence in. Given tax season is upon us, what are some of the common mistakes you see with DIY tax filers every year?
Some common mistakes I think you should avoid:
- Claiming moving expenses when your employer has already reimbursed you. If you claim moving expenses, you must include any reimbursement as income on your tax return.
- Claiming public transit day passes, tokens or tickets. You can only claim monthly or annual transit passes.
- Claiming personal or living expenses that are not legitimate tax deductions, like funeral costs, wedding costs, or legal fees for separation or divorce agreements.
- Filing an incomplete or inaccurate return. Using tax preparation software like TurboTax ensures that your return will be prepared accurately, reflecting all of the latest tax changes. TurboTax will also guide you through the completion of your return and search all of the tax credits and deductions to make sure you take advantage of the ones that apply to you, so you pay the least amount of taxes possible.
Robin, I’m sold! I’ve been using TurboTax for years and will continue to do so. Thanks for the tips Robin, but I know you have more to share. In Part 2 of this post I’ll share more of Robin’s tax tips to help you get online with TurboTax and file your taxes sooner, easier and accurately.
Now – time for the giveaway! Good luck to all entrants!