Millions of Canadians are preparing to file their annual tax returns by the April 30 due date, and if you’re a medical student with little or no income, you may think there’s no need to join them. But you might be surprised at how easy it is to prepare and file your tax return — not to mention the long-term benefits that filing a return can provide. Let’s review some simple steps you can take to get organized this tax season.
Step 1: Register for an online account with the Canada Revenue Agency
The first step, if you haven’t done so already, is to create an online account with the Canada Revenue Agency (CRA). Though it’s not mandatory for filing your return, an online CRA account is a secure portal that lets you view your personal income tax and benefit information, and manage your tax affairs online.
There are two options for registering, and then accessing, your online account with the CRA. The first option is to register directly on the CRA site using your personal information — you’ll receive new login credentials specific to the CRA if you register this way. The second option is to go to the same CRA site but use the login information you already have with your financial service provider, such as your bank or credit union, to register for and access your account.
Once you’ve submitted your registration and your online account is set up, you’ll be able to access tax documents and communicate with the CRA electronically — which is a way more convenient and timely option compared to mail or phone.
Your CRA online account will let you:
- access all of your tax information slips (such as any T4 slip you might have from working), RRSP (registered retirement savings plan) contribution receipts, and the T2202 form which certifies your eligibility for tuition tax credits;
- review the status of any tax returns you’ve filed;
- check your TFSA (tax-free savings account) contribution room; apply for the Canada child benefit;
- change the address you have on file with the CRA or your marital status.
Step 2: Gather the information you’ll need to complete your return
The next step in preparing to file your tax return is to gather the information you’ll need, including your tax information slips (like that previously mentioned T4). Now, with your CRA account all set up, you can access your tax information slips electronically (no need to keep that dreaded file folder with paper copies anymore — save the trees!).
You’ll also need to gather
- receipts for any tax credits or deductions, such as eligible moving expenses (which are deductible from your taxable income);
- receipts for eligible medical expenses;
- interest on your federal or provincial student loans (which can give you credits to reduce any tax you owe).
In Quebec, Ontario and Manitoba, any rent you pay may also provide a tax credit to reduce your tax bill (finally, those rent cheques come in handy!).
These days, many people complete a tax return using software approved by the CRA. Most tax software programs provide detailed guidance as you go through the return. As an additional bonus, when you use tax preparation software that is certified by the CRA, many of your tax information slips can be “auto-filled," which means you don’t have to enter the information directly. The CRA’s website includes a list of CRA-certified commercial tax preparation software packages and web applications to fit all budgets, including options that are free and “pay what you want."
Step 3: Prepare and file your return
Once your tax return is complete, make sure you file it — either electronically or by mail — by the filing deadline, which is April 30, 2020, for your 2019 tax return. When the CRA has assessed your return, you’ll receive a notice of assessment that indicates whether the return was accepted as filed or whether the CRA has adjusted it for you. It will also show you how much RRSP and TFSA contribution room you have, and other information such as any tuition credit amounts that you can carry forward to a future year (if you weren’t able to use them all in 2019).
Even if your overall tax situation is uncomplicated, there are still long-term benefits from getting organized for and filing a return, including establishing your eligibility for refundable tax credits, such as the HST or GST credit, provincial benefits like the Ontario Trillium Benefit and the new climate action incentive payment (available to residents of Alberta, Saskatchewan, Manitoba and Ontario), and Canada child benefits. It also creates RRSP contribution room that you can carry forward.
Still confused? MNP is offering free tax return services to medical students and residents in Canada (for basic returns). A qualified tax specialist can also help you with your income tax return. For personalized financial planning advice, please speak with your MD Advisor*.
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.