There are few things more frustrating and confusing than money for the modern family. For many families, this time of year is the climax of those emotions as we find ourselves in the middle of tax season.
But before we look at the current season, take this opportunity to look ahead to next season. This is a conversation I have on a regular basis as an accredited financial counsellor. At any given point, there is very little about our current financial situation that is managed, or fixed, by looking down where our feet are planted now. Planning ahead is nearly always the solution and tax time is no different.
Get organised. A simple filing system can make a world of difference. Choose from paper or paperless to get started, get your supplies, and spend an afternoon getting started. Expert TIP: Place a “To Be Filled” folder in the kitchen, or command centre, for those statements and bills amid a hectic day.
Save for your tax bill. If there’s a chance that CRA will be calling to collect, start saving each month now. Looking at your most recent return is a good way to estimate what your future might hold. Expert TIP: Open a separate account, start automated transfers in, and name the account “Tax.”
Seek support. If you have a question about your financial situation, find a professional to answer it. Too often we shy away from paying for help and end up costing ourselves more in the future. (Expert TIP: Join the free group on Facebook called Black Is The New Red to participate in exciting conversations about money.)
Now that we’ve looked ahead, let’s look at what’s right in front of us. While I don’t offer tax advice in my practise, I do hear the vibrant chatter each spring. Because getting organized to take our file to the accountant can be confusing, I’ve put together a quick reference list for some of the most common areas of concern:
• Registered Education Savings Plan (RESP): Contributions are not tax deductible.
• Canada Child Benefit (CCB): Benefit is not taxable.
• Affordable Childcare Benefit (ACCB): Benefit is not taxable.
• Childcare expenses: Deductible up to $8000 for children under age 7 and $5000 for children under age 5.
• Fitness and/or arts credit: Those were removed a few years ago when CCB was increased.
• Medical expenses: If you were not reimbursed for your expenses and you spent more than 3 per cent, you can claim.
• Work from home: if you worked from home for more than 50 per cent of the time for four consecutive weeks, you can claim $2 per day.
In 2021, there are many online resources to help you. Please ensure you’re using reputable resources like canada.ca or work with an experienced professional to prepare your tax return. This article should not be considered tax advice.