10 Tax Commandments

It's Easter weekend and we're fast approaching the deadline for income tax. With Easter being a religious holiday, I've decided to give this post a religious theme.

Tax time is always stressful and busy, especially if you've left everything to the last minute. But, it doesn't have to be that way, if you've planned correctly or you pay someone else to do all the work … or if you're reading this post!

Here are my Ten Tax Commandments:

1.) Thou shall not file late – there's no reason to not file on time. If you're missing slips or anything, try to estimate to avoid paying any late penalties. You can always do an adjustment later … but if the adjustment results in taxes owing, there could be a penalty, too.

2.) Thou shall not forget to plan for next year – why wait until next year again? Start the tax planning process now to avoid any nasty surprises next year. Some deductions require planning ahead such as retirement plan contributions

3.) Thou shall not forget tax slips – forgetting slips slows down the process and can result in penalties. Canada Customs and Revenue does a matching process – they match tax payers slips with those submitted by employers and they can tell if you're missing anything. If you submit and get a refund initially, but then have to pay later due to missing slips, penalties are quite large.

4.) Thou shall consider paying someone to do your return – if your situation is getting complex and you don't have the time, why not pay an accountant to do them? Yes, it's more expensive, but I think we're worth it ;) Many people should be able to get by using software, though. Apparently, Buffet does his own taxes.

5.) Thou shall not lie on your tax return – yes, we make mistakes and sometimes don't have receipts. We also have to use estimate sometimes (but rarely). The government runs algorithm on tax returns to look for unusual items. Just keep it real.

6.) Thou shall consider EFILING – it's much easier than paper filing and saves lots of trees. Some people think it makes it easier for the government to audit you, though. I don't mind – I'd rather do less work and save paper.

7.) Thou shall make tax instalments if you're self-employed – you're supposed to make quarterly instalments for taxes owed – you should get a notification after filing each year. If you miss instalments, you will be penalized.

8.) Thou shall not compare oneself to someone else – just because you work with someone and they get paid the same, it doesn't mean their tax situation is the same. I've had this happen – one brother complained because his brother got back more money, but the brother had more write-offs.

9.) Thou shall take full advantage of the Tax Free Savings Account – it's tax free and easy to use. And you don't have to pay tax on it!

10.) Thou shall not shoot the messenger – if you have taxes owing, don't blame the person doing your taxes. They can only do so much, especially if you haven't done any tax planning. To avoid the same thing next year, have extra tax taking off or put more into your retirement accounts.

Photo: stiina

RELATED POSTS

• Paying Someone to do Your Taxes
• 5 Tips to Prepare Early for Tax Season
• Quicktax vs. UFILE
• Owing Taxes and Dealing with the CRA.
• Tax Free Savings Account

So, please heed these commandments to avoid any problems this tax season. Why upset you-know-who?

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