Avoiding common mistakes when filing your income tax return is important. Filing a wrong or incorrect amount can lead to audits and penalties, which may drastically change the outcome of whatever refund you were expecting, not just this year but for future returns as well! That’s why we’ve compiled some common errors that people make with their taxes in Canada 2022, so they don’t have any reason for shame about what was overlooked last time around – now, all it takes are those few simple steps mentioned below.
The following are the most common mistakes on a tax return in Canada 2022. But don’t worry. We’ve included how you can fix that mistake after filing your return!
Not including all of your income:
It is the most common mistake made on a tax return. When you don’t include all your income, it throws off the rest of your deductions and can lead to an audit. The best way to avoid this is to ensure you have all of your documentation in order before filing. That way, you can be sure that you include everything.
If you realize that you’ve forgotten to include something after you’ve already filed, don’t panic! Just file an amended return as soon as possible. Include the missing information and indicate that it is an amended return. The CRA will then process your return and take the necessary steps.
Not claiming all of your deductions:
It is another common mistake people make. There are so many deductions available that it’s easy to overlook some of them. The best way to avoid this is to use the CRA’s tax deduction tool. It will help you identify which deductions you’re eligible for.
Not filing electronically:
If you’ve never filed your taxes electronically, you’re missing out on many benefits. For one, it’s a lot faster and easier than paper filing. But more importantly, it’s more accurate. The CRA processes electronic filings much more quickly and efficiently than paper ones, so you’re less likely to make mistakes that could delay your refund.
Not knowing what credits you’re eligible for:
Several tax credits are available, but many people don’t know about them. Again, the CRA’s tax credit finder tool can help you identify which ones you might be eligible for.
It is a mistake that can cost you a lot of money. You’ll be charged a late-filing penalty if you don’t file your taxes on time. The penalty is 5% of your unpaid taxes plus 1% of your unpaid taxes for each full month that your return is late, up to a maximum of 12 months.
Not paying your taxes:
If you don’t pay your taxes, the CRA will charge you interest on the unpaid amount. The interest rate is set at prime plus 3% and compounds daily. In addition, the CRA will charge you a late payment penalty if you owe more than $2,500 in taxes. The penalty is 2% of your unpaid taxes plus 1% of your unpaid taxes for each full month that your payment is late, up to a maximum of 24 months.
How to make changes to your tax returns
CRA is aware that people make these common mistakes on their returns and will allow you to request a change up until ten years ago. You have two options when filing an adjustment: either wait until receiving your Notice of Assessment or contact them beforehand so they can prepare the paperwork needed to meet deadlines!
Ways to make changes to your tax returns
You will need to sign in with your CRA user ID and password. Then, go to My Account and click on the “Change my return” link.
You can fill out Form T1-ADJ, T1 Adjustment Request, and send it to your tax centre.
You can visit your local tax centre and request an adjustment.
How can you avoid these common mistakes in the future?
The easiest answer to this question is to get help from advisory services. Many professional accounting firms can help you with tax preparation and filing to avoid any penalties or fees.
You can also take this opportunity to learn how to do your taxes yourself so that you can be sure of a mistake-free return in the future! The CRA offers several resources that can help you, including webinars, online courses, and publications.
We hope this blog helped you understand some of the most common mistakes people make when filing their taxes and how to avoid them. If you have any questions about this or anything related to taxes, don’t hesitate to contact us. We’re always happy to help!
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.