Canada tax season 2023 tips and tricks for success
As the deadline for your tax return is getting closer, many Canadians are feeling overwhelmed and stressed about it all. However, with the right tax tips and tricks, this tax season 2023 can be a manageable and even successful experience.
Whether you’re a first-time filer or a seasoned tax veteran, there are always new ways to improve your tax filing process. In this article, we’ll provide you with some tips and tricks for navigating the Canadian tax system and achieving financial success during tax season. So, let’s dive in and make this tax season a success!
Key Highlights
- Canadians have until May 1, 2023, to present their 2022 tax return, except for self-employed individuals who have until June 15, 2023.
- Important changes to taxation laws in 2022 include amendment of previous tax returns for COVID-19 support repayment, increase in benefits for homeowners, and eligibility of type-1 diabetics for the disability tax credit.
- Get the most out of tax season by making note of deductions, claiming credits, gathering information in one spot, keeping an eye on capital losses, and keeping a record of everything for six years.
When can I file my taxes in 2023?
Usually, Canadians have until April 30th to complete their tax filing 2023. As this year the deadline falls on a Sunday, you’ll have until May 1, 2023, to present your 2022 tax return.
If you are self-employed, you’ll have a few more weeks to file your taxes as your income return isn’t due until June 15, 2023.
What are some 2023 tax season changes I should know about?
The Canadian government has made some important changes to taxation laws in 2022.
Those who repaid COVID-19 support like CERB and CRB can amend their previous tax returns to file the repayment in the year they received the initial support.
Two benefits for homeowners have been doubled for 2022: the first-time homebuyer’s tax credit is now $10,000, and the annual expense limit for the home accessibility tax credit is now $20,000.
A new anti-flipping tax targets homeowners who sell their homes without living in them for more than a year. Canadians who find themselves in a sudden change in housing can still allow the primary residence exemption to apply if they prove their extenuating circumstances.
Certain medical expenses related to surrogacy or obtaining donor sperm or eggs can now be claimed.
Type-1 diabetics are now eligible for compensation under the disability tax credit, retroactively to the 2021 tax year.
Top 5 Tips to Get the Most out of Tax Season
1. Make note of deductions
Did you know that when you pay taxes, the government may give you some of your money back? It’s not a gift, it’s just your money that they were keeping for you.
To get the full amount of your refund, you can claim allowable deductions. Deductions are expenses that lower the amount of your income that is taxed. Three common deductions are RRSP contributions, child care costs, and home office expenses. You can find more information about how to claim these deductions and lower your income tax.
2. Claim credits
A credit is a type of expense that you can use to reduce the amount of tax you owe. It’s different from a deduction because it doesn’t come off from your income.
Credits are applied to taxes payable at prescribed rates and are different from deductions.
Non-refundable tax credits can only reduce your taxable income or bring it to zero, and any excess credit cannot increase your refund.
You can claim interest paid on student loans as a non-refundable credit. The federal and provincial tax credit is calculated based on the lowest tax rate and the amount of loan interest. It’s best to wait to claim the interest if you didn’t earn income in the past year, as you can carry it forward for up to five years.
Medical expenses, including ambulance transport, dental services, and fertility costs, can also be claimed as a non-refundable credit. Consider having the partner with the lower net income claim medical expenses.
Charitable donations can also be claimed as a tax credit, with the federal government crediting 15% on the first $200 and 29% on any amount above that. Each province also has its own tax credit rate.
You can also receive a refundable tax credit of up to $250 per year and $5,000 over your lifetime with the Canada Training Credit. You should wait to claim non-refundable charitable tax credits and transfer them to your spouse/common-law partner to reduce their tax liability.
3. Gather your information in one spot
Filing taxes early may seem like a good idea, but it could end up costing you more time and money in the long run. It’s better to be patient and double-check your tax slips and figures to ensure accuracy. If you’re unsure about the information you have, it’s best to wait.
Want to get ready? Here are some tax slips you might need: T4 for employment income, T5 for investment income, T4RSP or T4RIF for RRSP income, T4A for pension and other income, NR4 for non-residents, T5013 for partnership income, T3 for trust income, and T5008 for securities transactions.
4. Keep an eye on Capital losses
If you sell investments in a non-registered account for more than what you paid, you may have to pay taxes on the capital gains. However, if you sell for less than what you paid, you incur a capital loss. You can use this loss to offset future capital gains, but it’s important to keep track of it for tax purposes. Check your Notice of Assessment or investment statements to keep a record of your losses.
5. Make sure to have a record of everything for 6 years
Audits don’t only happen to others. It could happen to you so you’ll want to make sure you’re prepared if it ever happens. An audit is never a breeze but it’s about minimising the pain of a CRA audit, rather than maximising your refund. Be prepared to keep all income tax slips and receipts for deductions such as entertainment and home office expenses for six years. If you find it hard to organise all this paperwork, check out the various apps available for easy organisation of paperwork.
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FAQ
What is the deadline for filing my 2022 tax return?
For most Canadians, the 2022 tax return deadline is May 1, 2023, and the self-employed deadline is June 15, 2023.
How do I file a tax return in 2023?
If you’re looking for information on how to file your 2023 tax return, check the tax package for the relevant year as it contains instructions on how to file a tax return for this tax year.
What tax credits and deductions can I claim?
There are several tax credits and deductions available in Canada, including the basic personal amount, medical expenses, charitable donations, tuition fees, child care expenses, and many more. It is important to review the eligibility criteria and requirements for each credit or deduction before claiming them on your tax return. You can find more information on the Canada Revenue Agency website or consult with a tax professional for advice.
Final Thoughts
In conclusion, filing your Canada 2023 taxes can be a daunting task for many, but with these helpful tips and tricks, the process can be much smoother. From staying organised to maximising your deductions, these strategies can help you ease the stress of tax season. Remember to start early and seek out professional assistance if needed. By following these tips, you can minimise your tax liability and make the most of your financial situation.
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