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!
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?
I love tax time. In fact, I think all PF bloggers love tax time. :) So you can imagine how excited I was when I was asked to host H&R Block Canada’s first ever Twitter chat with my PF friends Bridget from Money After Grad, and Marissa from Thirtysixmonths.
Here’s all the information you’ll need to join in on the Twitter chat:
- February 11th, 8-9pm EST (5-6pm PST) – anyone in Canada can join in – we want to chat with everyone! :)
- Follow @KrystalatWork, @ThirtySixMonths, @MoneyAfterGrad, and @HRBlockCanada
- Use the #HRBTaxChat hashtag
- Jump in, and ask as many questions as you want! We’re here to help you with all of your tax questions!
What do you usually do with your tax refund?
Me, I like to use the 90/10 rule when it comes to tax refunds or any sort of “bonus” money I wasn’t expecting (like a bonus, or cash present) – where 90% of the money goes towards something responsible – like my mortgage or RRSP/TFSA – and the leftover 10% is spent on something fun.
This year, I won’t be getting a huge tax refund, so I will likely put the entire amount into my TFSA.
So no matter what your tax situation – whether you’re a student, filing for the first time, or have a complicated return – please join us in the #HRBtaxchat tomorrow! :)
In a somewhat surprising turn of events, I’ll actually be receiving a tax refund this year.
I had originally gone over my taxes myself using TurboTax, but came up with a $700+ refund amount. I didn’t think that could be true, given the fact that I was a freelancer for the majority of 2012, and didn’t pay taxes on the income I earned. So, logically, I thought I’d have to pay a few thousand dollars (I owed about $3,300 in taxes in 2011). I decided to trust a professional, and hired an accountant (who came recommended) to make sure all the paperwork was being done correctly.
Well, not only was I right about getting a refund, but my accountant found me even more tax savings. So I’ll be getting $975 back. AND I’m also eligible to receive the GST credit again. This was a combination of having a ridiculous amount of business expenses this year, and having a few thousand dollars in medical expenses to claim (since I was a freelancer, I didn’t have medical benefits).
What will I do with my tax refund? I normally like to use the 90/10 rule when it comes to tax refunds or any sort of “bonus” money I wasn’t expecting – where 90% of the money goes to something responsible – like my mortgage or saving for retirement. And the leftover 10% will be spent on something fun.
This year, I’ll be spending almost exactly 10% on a winery tour for Nic and I. We’ll be going to Mission Hill in Kelowna to sample my favourite B.C. wine this weekend. He booked us into a hostel for $25 a night, and we’ll likely be doing a bit of hiking in the area as well. :)
As for the rest of the money, since I’m already paying an extra 20% on my mortgage payments, I’m going to put it towards my retirement – likely half into my TFSA account with Questrade, and the other half into my RRSPs.