If you're self-employed business owner, you should start to think about getting ready for tax filing season, as the April deadline is just around the corner. Though your actual filing deadline as a self-employed individual is June 15, if you have taxes owing they're due April 30 to avoid interest and penalties.
If you have employees, hopefully you've started preparing T4 slips to meet this year's March 2 deadline.
"Tax calculators are only as accurate as the numbers you enter."
Unfortunately, every year, millions of Canadians make mistakes when preparing their taxes, many of them are simple errors but also mathematical miscalculations.
If you've made some blunders on your taxes before, you know that the CRA isn't one to simply write it off. Mistakes can lead to audits, assessments and penalties that gain interest the longer fees go unpaid.
The following tips are some of the more common mistakes made at tax time that you should do your best to avoid:
1. Entering the Wrong Social Insurance Number
Your Social Insurance Number is unique to you and you alone. But you may be surprised at how frequently tax filers enter the wrong number, a mistake that's typically done when you're rushing or not paying attention. Once you enter your number, take an extra few seconds to go over it again, as getting it wrong could deny you of tax credits you're due to receive.
2. Mathematical Errors Going Unnoticed
Unless your job requires you to constantly be using calculations, you probably could use a refresher in your math skills. That's not to say that anyone forgets basic arithmetic, but it's easy to make mistakes on tax forms.
Granted, most people today thanks to e-filing are able to use tax calculators, which get the right answer every time. But these calculations can only interpret what you enter, meaning that if you enter the wrong data, your total will be inaccurate as well. You can avoid this by double checking your numbers or by relying on an FBC tax professional to handle the entire process for you.
3. Filing Under the Wrong Status
Whether you're married or single, you'll need to enter the correct status on page 1. If you enter the wrong marital status, you could be robbing yourself of a tax deduction.
Do not indicate separation until you have been separated for more than 90 consecutive days. A common-law relationship exists when you have been living together for at least 12 months or you have children together through birth or adoption.
Make sure you enter your marital status correctly as well as the number of dependants you can claim if you're a parent.
4. Forgetting to Sign Your Return or Check
Odds are you've sent a check out before to a debtor without attaching your signature. What always follows is the company or person that receives the check has to send it back to you before it can be cashed.
The same rule applies if you don't sign your tax form, whether by hand or electronically. Failure or forgetting to sign will delay the filing process as well as what money you have coming to you. If you owe the government money, make sure you sign the check as well.
Everyone makes mistakes, but with these tips, you can avoid common pitfalls, helping to make the process more manageable. For additional suggestions, talk with an FBC tax specialist.