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What if you don’t file your taxes on time?

Note: this post is sponsored by TurboTax Canada, but was written and edited by me.

Most of us have already filed our taxes. I haven’t yet, but have all my paperwork ready for this weekend. :) However, there are thousands of Canadians that will end up filing late, or not filing at all. And that’s even after the CRA extended this year’s tax deadline to May 5th!

If you don’t owe money, there won’t be a late filing penalty; you can still file later and still receive your tax refund. Not a big deal.

BUT if you owe money and file late for whatever reason, you will end up triggering penalty fees, interest payments, and you could become ineligible for certain government benefits.

Here are a few things to know if you file your taxes after the April 30th May 5th deadline:

Interest and penalties
If you owe money on your 2014 taxes, compound daily interest is charged starting the next day after the filing deadline. Not only that, but you’ll also have to deal with a late-filing penalty of 5% of your 2014 balance owing, plus an additional 1% of your balance owing for each full month your return is late (to a maximum of 12 months).

If you happened to have been charged a late-filing penalty in one of the previous three years, your penalties may double to 10% of your 2014 balance owing, plus 2% of your 2014 balance owing for each full month your return is late, to a maximum of 20 months. Yikes!

Extraordinary circumstances
If you owe the CRA money and something has prevented you from filing on time, or making a payment when it became due, there is a chance  the penalties and interest will be waived by submitting a request. Some examples of extraordinary circumstances include:

• Natural or human-made disasters, such as a flood or fire;
• Civil disturbances or disruptions in services, such as a postal strike;
• Serious illness or accident; and
• Serious emotional or mental distress, such as death in the immediate family.

Loss of benefits
The government calculates certain benefits based on your most recent tax return filed. This means that if you haven’t filed your taxes, you will not trigger benefits you might be entitled to – such as the Canada Child Tax Benefit, Universal Child Care Benefit, Children’s Fitness Tax Credit, and the GST/HST benefit.

Don’t forget that if you are applying for a mortgage, lenders will require your most recent Notice of Assessment. If you haven’t filed your taxes, there will be no paperwork to validate your income.

So if you haven’t gotten your paperwork ready to file before the April 30th deadline, it’s in your best interest to spend some time this weekend to sort out your information. Using online tax software like TurboTax will help you figure out exactly what you owe in easy to follow steps. Remember that filing before the deadline might mean you still get charged interest on the amount owed, but at least you’ll be able to stop the late filing penalty from increasing.

Have you ever missed the tax filing deadline?

It’s the little things in life

IMG_7082A few weekends ago, my BF and I drove down to the Skagit Valley to visit an old family friend of his, and to see the beautiful La Conner tulip fields. His friend is in his 80’s, yet he still chops wood, shovels snow, tends to a garden, and goes on road trips to visit his family. But none of that seems remarkable to him (even though I’m constantly surprised at how active he is). And every time I see him, whether he’s working on a puzzle in his sun room, or feeding the neighbourhood cat, I can tell it’s the little things in life that make him happy.

That day with him got me thinking about the little things in my life that make me happy. Just off the top of my head, I love seeing my BF laugh so hard that he doesn’t even make a sound. I love that exhausted feeling in my legs after a long run. I love when the barista at Starbucks spells my name right, or when something is on sale that I’ve been wanting to buy for a long time, or when I get rewarded for responsible spending with a credit card. :)

And to be honest, the rewards I get from my credit cards always go to something fun – whether it’s a flight somewhere, a nice meal out, or a wine tour. I think of it as my reward for smart spending and keeping out of credit card debt. :) And on that note, the new SimplyCash Card from American Express focuses on earning cash back for every day purchases, a great reward for doing something you’re already doing. You can earn 5% cash back on all eligible purchases at gas stations, grocery stores and restaurants (up to $250 cash back) for the first 6 months), and 1.25% on all other purchases, and when your Welcome Rate ends. That can definitely add up fast, especially since there isn’t a limit to how much you can earn.

A helpful tip I can share (although I’m sure most of you already know) is to use rebate sites like Ebates or Great Canadian Rebates to gain additional money off your purchases online, as well as earning cash back rewards from your SimplyCash Card from American Express. :)

What are some of the little things in your life that make you happy?

Note: this post was sponsored by Amex Bank of Canada. The views and opinions expressed in this blog, however, are purely my own.

How to pay back the Home Buyers’ Plan (HBP)

Most of you know that when I bought my townhouse almost 4 years ago, I utilized the First Time Home Buyer’s Plan (HBP) to help with my down payment. For those unfamiliar with the HBP, it allows you to use up to $25,000 of your RRSPs towards the purchase of your first home – tax free!

This was a strategy I always knew I was going to use, so anything that was earmarked for my down payment, I threw into my RRSPs. Then, I would reinvest my tax refund back into my RRSPs for an even bigger gain. I also saved about $20,000 outside of my RRSPs, since the maximum you can take out is $25,000.

Related: How I saved for my down payment

You have up to 15 years to pay back the amount you’ve withdrawn, so for each year of your repayment period, you have to repay 1/15 of the total amount. So for example, I took out $25,000. My repayment every year is $1,666.67 ($25,000 / 15). Each year, you’ll get a Home Buyers’ Plan Statement of Account with your notice of assessment, which will include all the information you need – total HBP withdrawals, the amount you’ve repaid to date, your balance for the HBP, and the amount you have contributed to your RRSPs and designate as a repayment for the following years.

How to pay the HBP back

I use TurboTax every year to do my taxes, and it’s really straight-forward in how to pay it back.

hbp1

Just enter in all of your information, and TurboTax will do the rest for you. Honestly, it really took all the stress away from paying back the HBP, because at first, it seemed really confusing. Most online tax software is set up to handle HBP repayments in a user-friendly way. :)

hbp2

When you have to start repaying

Your first repayment starts the second year following the year you made the withdrawal.

You’re allowed to start making repayments earlier, but your years of repayment (15) will remain the same. Any repayments you make before your first repayment is required will reduce the amount you have to pay for the first year. That is, unless your early repayments are more than the minimum required payments for the first year, then the difference will reduce your HBP balance (and the remaining repayment amounts) over the 15 year repayment period.

Paying more or less than the minimum payment

If you want to pay more than the 1/15 required in any given year, you’ll still have to make your payments the next year, it’s just that the HBP in later years will be reduced.

However, if you want to pay LESS than the minimum required payment, the government will treat the amount you withdrew from your RRSP as income for that year. You’ll be taxed on it, and it won’t be pretty.

Important! You can’t withdraw any money from your RRSP that was contributed within the last 90 days. Consider the timing if you plan on utilizing the HBP for your first home.

What I love about the Home Buyers’ Plan is that you can use it for whatever you want. I used the entire amount for the down payment on my home, but you could use it for renovations, closing costs, or buying essentials for your home. It’s flexible, and that’s what makes it a good tool for first time home buyers.

Did you use, or are you considering using, the Home Buyers’ Plan for your first home?

Note: this post is sponsored by TurboTax Canada, but was written and edited by me.

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