5 Misconceptions Regarding Personal Taxes

4 February, 2014

The cold is gripping and takes away your breath, but that is only the beginning.  Now that tax time is upon you, it makes Canadians feel a chill throughout their body.  Not many Canadians are excited about filing in their tax returns, but more importantly they are most likely giving the Government more then they deserve!  Let us at Numbers Plus, your local Mississauga Accountant, clear up some myths about your personal taxes.

Myth # 1: RRSP contributions do not have to be reported if I do not use the deduction.  – Even if you are not claiming a deduction for the contributions you made in the year, you are still required to record the fact that you made them.

Myth # 2: Students get refunds on their tuition. – To receive a tax deduction, you must have earnings.  However, they can transfer up to $5,000 to a parent, grandparent or spouse or they can carry forward credits to use in future year.

Myth # 3: Mothers are required to claim the dependents – Regardless of gender, it is based on the lower income spouse claiming childcare expenses whether it is the mother or father. Either parent can eligible to claim the tax deductions.

Myth # 4: Business Mileage is easy, I just charge it all as business – Reality is a self-employed Canadians is required to keep a logbook to calculate the auto expenses for their business.  By tracking the actual mileage, you are able to clearly determine the expenses generated by business vs. personal.

Myth # 5: I don’t owe any tax so I don’t need to file a tax return – This one isn’t so much of a myth as it is a rule of thumb.  However, if you are entitled to any refundable credits, like the CST Credit, or programs like the Universal Child Care payments then you need to file a return.  Also, if you have certain non-refundable credits you need to file the return now to claim them so they will be available to you in future tax years.

Many Canadians prefer to have their taxes quickly prepared and get the process over with and focus on their day-to-day lives.  Not understanding the complexities of taxes, opportunities for deductions, or how to minimize tax liabilities is a challenge for most Canadians.  Do yourself a favor and have a professional accountant prepare your taxes.  Contact your local Mississauga Accountants at Numbers Plus to help you develop your tax strategy.  Contact us today.

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