It may not be spring, but one of the nation’s major seasons is fast approaching. As of February 24, Canadians can begin filing their 2024 tax returns online.
It can be a daunting task for those who are filing a tax return for the first time and as the country’s taxpayers break out their calculators, gather documents, receipts and prepare to get to work, Jack Gerger, franchise co-owner of H&R Block in Moose Jaw and Weyburn, shares some advice.
He explained that while many first-time filers can get by doing their taxes on their own, utilizing a professional can help them navigate the system and get the most out of their returns.
Gerger noted that accurately reporting income –from all sources – can be a challenge for those doing their own returns, particularly for those who receive some of their income through cash.
“Almost any type of income is taxable. There are some exceptions, of course, but tips are definitely taxable. Normally it's up to the employee themselves to keep a record of that and then report that on their taxes or to their tax professional of the amount along with any other any other type of income you may have had during the year,”
“If you're not sure whether it applies or not, just get to ask about it for sure. In some cases, there is maybe a side job on a contract basis or something that needs to be included as well. It’s important to include all income sources.”
Failing to report income in all its forms can lead to some hefty penalties, explained Gerger.
“It can be quite costly to forget an item on your tax return. Even for job that you may have only worked for just a little while. Sometimes there’s going to be a tax slip issue. Then if you miss that when you file, it can be costly in the way of penalties, especially if you miss reporting income more than one year.”
Avoiding uncertainty is key when it comes to accurately filing your taxes, so Gerger encourages individuals to make inquiries when needed.
“Just ask your tax professional ... a lot of the time we're asking the client questions and are wanting to make sure we don't miss anything significant.”
“Timelines are quite often what (clients) are wondering about. When their return is due, maybe when they should be filing it, when they might get their refund, and when they might get other payments that are coming from filing that return.”
Gerger stressed the importance of asking about the numerous credits that you may be eligible for.
“Depending on their age when they start (filing taxes) they are quite likely eligible for GST credits and carbon credits which can amount to quite a lot per tax year.”
Another issue that first-time filers may face is that of deductions, how much to remit every cheque, and whether or not overpaying can be beneficial when the end of the fiscal year arrives.
“It really depends on the individual there, a lot of people do prefer to overpay than underpay it. It's always a more positive experience at tax time if you're pretty sure you've paid enough or a little extra and you'll have something coming back there rather than having to pay (more).”
“A lot of people as well like to use it as a bit of a forced savings account, they may find it difficult to save up every month. That way it sort of forces them to do it when the tax comes off your income sources, then you don't really see that money, and yet it's there for you at the end of the year for maybe a major purchase or something that you're wanting to save up for.”
He said that the lion's share of his clients prefer to overpay, which mitigates the risk of having an unexpected – and costly – bill arrive on their doorstep.
Gerger also addressed the fact that it is more common than ever for people to hold multiple jobs at one time, which for some can complicate the filing process and also lead to costly penalties.
“We have some pretty hard-working clients that will sometimes work two or three different jobs, what happens when they're working at the same time is each of those jobs takes their personal deductions into account, and so normally they end up short on withholding tax, and then that can sometimes have some pretty big tax bills at tax time.
“That's something that people are not expecting. If you are in that situation, a real good way to avoid that is when you do your TD1 for withholding at each job, only claim those personal amounts on one job. You can’t claim those on two or three different jobs.”
Some items that Gerger recommends considering come tax time include some new or updated additions to the list of things that can be deducted. He highlighted expansions to the Volunteer Firefighter and Search and Rescue deductions, which have increased federally from $2,000 to $6,000 for 2024 and could be a worthwhile thing to pursue should an individual be volunteering in addition to their job.
Provincially, taxpayers are able to deduct dependent children, and those who take in a combined income of under $60,000 per year and have children in sporting or similar activities (under the age of 18) are able to claim between $150 and $200 through the Active Families Benefit.