Tax Tips

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What paperwork do you need? Individuals
 
Throughout the year you will come across paper documents supporting important information for your tax returns. Gather tax records all year!

1. Income

Keep your T-Slips from your employer and/or Canadian Government, RRSP contribution slips, Interest income, Alimony and Child Support payments, Investments, business statements and Annual statements from your financial institutions.

2. Expenses

Receipts of deductible items such as donations, student loan interest statements, child sports receipts, rent receipts, property tax receipts, medical expenses, public transportation receipts, moving expenses, adoptions expenses, school/tuition expenses, business expenses and employee expenses such as mileage or uniforms.

For real estate transactions, you’ll need the closing statement and any home improvement receipts in case those are deductible.

3. Taxes

If you pay any kind of taxes throughout the year (i.e. quarterly installments) keep these receipts in your files.

  

Valuable Tax Advice on Receipts  

•Keep one expandable wallet in your vehicle and one in your kitchen for receipts. These are two locations where receipts are often found “floating”. Once a month, transfer the receipts to your Taxes File Location.

  

•If possible, make a note on each receipt what was purchased and circle/highlight the date. When you’re in the middle of preparing your taxes, you’ll appreciate this attention to detail.

•When claiming medical travel, include the appointment date, location and mileage to/from it.

  

Knowing what to keep will ensure you have claimed all income and deductions necessary.

Getting Ready to File Your Income Taxes
  
One of the main reasons we delay filing our taxes is being disorganized; we don't know where the papers we need are located, and sometimes we don't even know what we need. We anticipate the search ahead with dread, and putting it off is a common solution.

We tend to have a lot of paper clutter related to taxes in the form of files, envelopes and boxes full of statements and receipts. When this paper clutter gets out of control, we become overwhelmed.

Fortunately, there are some simple solutions.

1. Create a file location

Pick one place to put all the papers relating to your income taxes. It can be folders in a filing cabinet, envelopes in a box, binders or an expanding file folder.

If you like uniformity, stick with one color for your folders, envelopes or binders. If you are more visual, you might prefer a separate color for each category.

Mark each with the category plus the tax year such as Expenses 2015.

2. Sort slips and receipts

Sort your papers into three major categories:

  • Income
  • Expenses
  • Taxes  

For expenses, you may sort further and group according to type of expense such as 

Sort your papers according to their purpose:

  • T Slips such as T4, T4A, OAS, CPP, etc
  • RRSP Receipts
  • Donations
  • Child Recreation Receipts
  • Rent/Property Taxes
  • Medical Receipts
  • Employment Expenses
  • Tuition Slips

3. Create a checklist (or download this one)

As you receive your papers, check then off the list.

4. When you have all your papers, bring them to Hourglass Resources. We have a 24-hour locked drop box and extended pick up times too!    

  

  

What paperwork do you need? Business
 
So, you work from home and are not sure what you can claim and what you can't.

You can deduct expenses for the business use of a work space in your home, as long as you meet one of the following conditions:

•it is your principal place of business; or

•you use the space on a regular and ongoing basis to meet your clients, customers, or patients.  

You can deduct part of your maintenance costs such as heat, home insurance, electricity, and cleaning materials. You can also deduct part of your rent/property taxes, telephone, mortgage interest, and CCA. To calculate the part you can deduct, use a reasonable basis such as the area of the work space divided by the total area of your home. As a general rule, no more than 50% or else you are living in a business and a home.

As a general rule, Internet, mobile phone, computer and printer expenses are 100% business expenses.

You may deduct car expenses such as fuel, oil, maintenance, repairs, insurance and registration, pro-rated for its use. Record the mileage on January 1st and record each trip you use it for business. At the end of the year, the percent you drive for business is used to calculate the percent of expenses you can claim. If you use a car strictly for business, you claim 100%.  

What to Keep?
  
Here are some steps to keep your files from becoming overloaded with old and outdated records.  

1. Review Archived Tax Records  

Generally speaking, you should hang onto supporting tax documents for seven years in case of an audit. Store your archived paperwork labeled with the year, contents, and destruction date. Then when you add the new year’s tax records, the oldest can be shredded.

2. Keep Permanent Files  

A few items should also be moved to a permanent file:

  •  receipts, warranties, and instruction manuals for major purchases
  • investment statements and trade confirmations
  • important correspondence and legal documents
  • car and property records
  • insurance policies
  • Wills and Power of Attorney  

And of course, hard-to-replace vital records (titles, deeds, birth certificates, passports, etc.) should be placed in a fire safe or safe deposit box.

*** At Hourglass Resources, we provide you with a copy of your income tax return in a twin pocket portfolio. All seven years fit perfectly into an upright magazine holder. We can provide that too.

  

 

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