File quickly and easily while maximizing your credits and deductions
Whether you’re a med student, a resident or a practising or retired physician, tax time can be challenging and stressful. You need every advantage possible to make sure you get your tax return right. That’s why we’ve pulled together these five simple but effective tips to help you optimize your tax filing.
Tip 1: Fool yourself into beating your filing deadline: Plan ahead
Unless you are self-employed, or your spouse is, your deadline to file taxes is April 30, 2020. Mark this date in your calendar, then put it aside and set a target date that is sooner.
If you’re expecting a tax refund or no additional taxes owing — and most med students will fall into this category — it makes sense to target filing as early as possible. You’ll receive your refund sooner (if you’re eligible for one) and have it available to pay off debt, invest or spend however you want.
On the other hand, if you’re expecting to owe additional taxes, the key is to not miss the deadline, so it’s a good idea to build in a buffer to allow for unexpected delays. If you do miss the deadline, you could be subject to late-filing penalties. Even if you can’t pay your tax bill immediately upon filing, it still makes sense to meet your deadline, as you’ll avoid the initial late-filing penalties.
Long story short, filing early is the best — and safest — approach. You’ll avoid the stress of scrambling at the deadline and have the time to make sure your return includes all the credits and deductions you are eligible for.
Tip 2: Don’t leave money on the table with CRA: Get your missed credits and deductions back
While your goal should be to claim all your credits and deductions when you file, there’s always a chance you’ll miss something. The good news is that the Canada Revenue Agency (CRA) will let you amend your tax returns for any of the previous 10 calendar years. So, if you missed claiming your medical school tuition fees in 2015, you can still go back and get those added to your filing for that year. Look for the T1-ADJ form on the CRA website, and use it to submit your amended filing and supporting documentation.
Tip 3: Let CRA do the typing: Stop worrying about your T-slips with CRA’s Auto-fill service
Did you start working at a new clinic or hospital last year? Will your old employer know where to send your T4 form? As tax season rolls around, many people start to worry about gathering all the required information together to file their return. While these concerns are understandable, the reality is that they are largely unnecessary.
With the CRA’s Auto-fill service, users of certified tax software can have the CRA automatically complete parts of their income tax return, using information it has available from employers, financial institutions, etc. Auto-fill can provide information for more than 15 different tax forms, including the T3, T4, T5, RC62 and PRPP information slips.
To be eligible for Auto-fill, you will need to be registered for a CRA My Account and use a tax software package certified by the CRA to complete your return. The good news here is that it’s not just expensive tax software that allows you to do this — several free and pay-what-you-want software packages are also on the certified list stored on the CRA website.
Tip 4: Get CRA to show you care: Claim your caregiver and disability tax credit
Another tax credit that should not be overlooked is the Canada caregiver credit. This credit is for individuals who support a spouse, common-law partner or dependant with a physical or mental disability. If you help to support someone in your immediate, or even extended, family, you may be eligible. The person being cared for does not have to be living with you for you to be able to claim the credit.
Similar to the Canada caregiver credit, the disability tax credit is another avenue for people with prolonged or severe disabilities or for those who support them. This tax credit can reduce the income tax owed. To claim this credit, you will need to have a medical practitioner’s certification of the nature and severity of the person’s impairment.
Tip 5: Double up your home accessibility tax credits
The home accessibility tax credit allows you to claim certain expenses related to making your home more accessible. You may be able to claim this credit if you incurred eligible expenses and are a senior, a person with a disability or a family member living with such an individual. What many people don’t realize is that you can potentially double or even triple your benefits by claiming the same expense as a medical expense credit and potentially as a provincial home accessibility tax credit.
Some of the expenses eligible for doubling up include the following:
- widening doorways
- changing electrical outlet locations
- modifying kitchen cabinets
- installing entrance and exit ramps
With these five tips, you’ll be well on your way to successfully navigating tax season this year.