Narcity recently spoke with Stefanie Ricchio, a CPA and spokesperson for TurboTax Canada, about Canada's taxes to find out what you need to know when filing your return this year.
Here are six tax mistakes to avoid making so you can save money and even get money back from your 2023 income tax return.
Not including income
Forgetting to include a T slip and income that you had during the year or making a deduction against your income that maybe weren't eligible to make is a common tax mistake, according to Ricchio.
That could lead the Canada Revenue Agency to reassess your tax return because there's a mismatch between the amount of T slips you reported and what the federal agency received on your behalf.
Then, you could end up with a smaller tax refund and have to pay money back or have a tax owing balance.
Not understanding tax brackets
If you don't make a lot of money or don't have any income at all, you might think you don't need to file your 2023 tax return.
But that's a mistake that you shouldn't make this year.
"Because of inflation, the government has chosen to increase the tax bracket so that we can just stay in the lower tax bracket," Ricchio revealed.
Canada's tax brackets and rates for your 2023 income are:
- 15% on the portion of taxable income that's $53,359 or less
- 20.5% on the portion of taxable income over $53,359 and up to $106,717
- 26% on the portion of taxable income over $106,717 and up to $165,430
- 29% on the portion of taxable income over $165,430 and up to $235,675
- 33% on the portion of taxable income over $235,675
"Even if you did get a raise and we're expecting to be bumped up, that's not happening," Ricchio said.
According to the tax expert, you also need to be aware of Canada's basic personal amount — a non-refundable tax credit that can be claimed by everyone no matter their tax bracket.
It can provide a full reduction from federal income tax if you have a taxable income below the basic personal amount or a partial reduction if your taxable income is above the amount.
"The non-refundable tax credit is $15,000 this year," Ricchio said.
If your income is less than $15,000, "you won't have any tax payable, but it doesn't mean you shouldn't be filing your taxes," she continued.
Not getting federal benefits
"Delaying the filing of your tax return can impact and delay benefit payments from the government," Ricchio said.
That includes the GST/HST credit, Canada Carbon Rebate (formerly the climate action incentive payment), and Canada Child Benefit.
"Those are all tied to your tax return," the tax expert shared. "You delay your tax return, you can delay your payments. You can stop your payments."
The CRA recently revealed that if you want to receive the Canada Carbon Rebate payment on time in April, you have to file your taxes more than a month before the deadline!
"If you're not filing or you're not doing it correctly, if you're overstating your income, you could accidentally disqualify yourself from receiving those refundable tax credits," Ricchio said.
Even if you get your tax return in right at the deadline, "you're in that influx of late" because the CRA has been going through returns since filing opened in February.
"You get to the end of it, it's just delayed. Especially if you're not choosing to NETFILE," Ricchio said.
So, it's important to understand what you need to ensure you keep getting federal benefits if you're eligible to receive them, according to the tax expert.
Not claiming tax credits
Canada has two types of tax credits: non-refundable and refundable tax credits.
Non-refundable tax credits can reduce your payable tax to zero but can't get you a refund if the total credits are more than what you owe.
Refundable tax credits can get you money back when it's more than the amount of tax due or if there's no tax due because the deductions have reduced it to zero.
"A non-refundable credit you go into the system when you're preparing your tax return and you make the selection to claim it," Ricchio explained.
The tax expert also noted that it's common to forget to claim a tax credit but that doesn't mean it just goes away.
"If you forget to apply any eligible non-refundable tax credit, the process is super simple to fix it," Ricchio said. "You can go ahead and log into your My CRA account online and just manually do a T1 adjustment."
You can also print the form and you it to the CRA by mail so you can get that adjustment.
"The CRA will take care of it usually within four weeks or so," Ricchio said.
"Just because you forgot to do something doesn't mean that you don't have the full ability to go back and adjust your prior year returns," she said. "Nothing that you're actually eligible is ever truly lost."
According to Ricchio, "not recognizing what is available to you in terms of a credit" is a tax mistake to avoid as well.
"Whether it's non-refundable — something that you will proactively enter on your tax return — is key because that is the one where it truly impacts the dollars in your pocket."
"You don't claim a non-refundable tax credit, you're not reducing your calculated total tax payable," Ricchio said. "So that's going to increase your refund or it's going to decrease your refund or put you in a payable situation."
"That's probably most significant," she noted.
Not knowing claims and deductions
To avoid making mistakes on your tax return, Ricchio recommended having all your receipts in order — like for donations or contributions to RSPs, TFSAs, and FHSAs — and knowing about your eligible deductions.
"That is where a lot of the mistakes and the errors for most people happen," she said. "Sometimes they're kind of flying blind."
This also includes knowing what the CRA has changed for the 2023 tax year like the process for claiming home office expenses.
"People are gonna go looking for that $500 flat rate method and it's not going to be there," Ricchio noted.
"If you want to claim your at-home expenses, you need to make sure you have the conversation with your employer so that they sign for you that T2200," she explained. "As long as they sign that for you, you're good to go to use the detailed method and continue to claim expenses that are eligible."
Also, the rural supplement of the Canada Carbon Rebate has to be claimed on page two of your 2023 tax return!
Not filing before the tax deadline
The deadline for filing taxes in 2024 is Tuesday, April 30 for most Canadians.
However, if you're self-employed, the last day to file taxes in 2024 is Monday, June 17. That's because the usual deadline of June 15 is on a Saturday this year.
It's important to note that if you owe money to the government the deadline to pay your taxes is April 30, regardless of if you're employed or self-employed.
"That's really, really important and I think that's something that gets often confused," Ricchio said.
Delaying filing can delay or stop federal benefit payments and it can also delay getting your tax refund deposited into your bank account or mailed to you.
"Getting our heads wrapped around those deadlines, the impact that they have" is crucial, according to Ricchio.
This interview has been condensed and edited for clarity.
This article's cover image was used for illustrative purposes only.
