8.4.2 Video: Organizing your taxes

From: Financial Consumer Agency of Canada

Transcript

Introduction

When you had a major project due in school or at work, did you work steadily at it, doing a thorough job, or did you procrastinate and have to rush the job at the last minute? If you gave yourself enough time and preparation, it felt good to successfully deliver the completed project on time, right?

Taxes are a similar type of project. Preparing small pieces each week and month can make tax time a breeze.

Segment 2: The opportunity

Filing your tax return is stressful only when you are not prepared. But you can reduce the stress by taking small steps throughout the year. The first step is to organize your receipts every month. To do this, you'll need a system.

Segment 3: Getting organized

Let's start our family tax file system.

(Voiceover)

  • You will need a large accordion document file or part of a file drawer, several file folders and a marker.
  • Start a file folder for each member of the family that you will be filing for. Write the person's name on the file, as well as their birthday and social insurance number.
  • Divide each file into two parts and label one of them "Ongoing". The rest of the folder is for Current documents.
  • In the "Current" section, place any records relating to the current tax year. Separate them with clips or envelopes as follows:
    • Income records such as T-slips or RL-slips and related employment records
    • Expense records such as medical expenses and donation receipts
    • Investment receipts and other documents
    • If any family member is self-employed, create a separate file for their business records. File a copy of the income statement for the business in the Current section when it is complete.
    • Keep the family file where it will be easy to reach – a desk drawer or file cabinet are good places.

When you receive documents like tax receipts, T-slips or RL-slips, place them in the Current file for the relevant family member.

  • For documents that you will you will use year after year, like investment records, place them in the Ongoing section.
  • At the beginning of each year, start a new Current file.
  • Keep copies of old returns together in a safe place, such as a filing drawer or box, together with any supporting documents, Notices of Assessment, etc. Label them with the tax year to which they apply. If these are bulky, place each year in a separate file. You can destroy the old files when they are seven or more years old.
  • Place your Notice of Assessment in the file when you receive it.

Segment 4: Filing your tax return:

Now that you have all your documents in order, you just have to complete your T1 tax return and, if you live in Québec, your TP-1-V return.

(Voiceover)

  • If you have a simple return, you can do it by hand.
  • However, you'll save time, make fewer mistakes and receive refunds faster if you file using one of the free or low-cost software programs approved by the Canada or Québec revenue agencies.

Segment 5: File your tax return early:

Lastly, file your tax return as soon as it's complete. You'll avoid stress and receive any refunds due sooner.

Even if you miss the April 30 tax deadline or you are missing documents, you should file your return as soon as possible.

That way, you'll reduce any penalties if you owe money and if you're owed a refund, you can claim it as soon as possible.

If you were missing documents, you can amend your return when you get them.

Conclusion

By preparing for tax season with small steps and filing your tax return on time, you can avoid the stress of filing taxes and reap the benefits of delivering a well prepared project on time.

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