calculating-budget-tax

During last year’s tax season, 1 in 5 Canadians scrambled to meet the deadline, notes an H&R Block Canada poll.

So before holiday celebrations get underway, tell clients to take a few moments to prepare for tax season. Ask them these questions.

Do you know when to file?

Clients can begin preparing their returns once they receive their T4s, which have to be mailed by February 28.

Are you ready?

The sooner they prepare, the better off they’ll be come April 30. Tell them to start with income slips like T4 slips, T4E slips for employment insurance benefits and stock transaction slips.

Read: 8 tax questions to share with clients

Then bring together supporting documents like bills, tuition and education receipts, transit pass receipts, childcare expenses, political contribution receipts and other major life expenses. If clients set aside documents they already have sooner, it’ll help them be better organized once T4 slips arrive.

How much did you really make in 2015?

They may know their salaries, but do they know what else qualifies towards total income. Did they cash in some of their RRSPs? Did they make money from the sale of a home? Did they rent out an apartment or use their car for a ride-sharing service? Help them understand their income, what needs to be declared and whether or not any tax has been withheld.

Got kids?

There are many ways kids can help at tax time, but parents often don’t know about them all. Childcare, sports and physical activities and university tuition are just a few credits to take advantage of. And remember that for programs like the fitness and arts tax credit, the activity doesn’t have to be completed in 2015 – it just needs to have been paid for in 2015 so they can claim it on their 2015 returns.

Read: Tax brackets have changed…but there’s more

Did you take care of yourself?

Medical expenses are some of the most missed credits each year, so help clients familiarize themselves with the eligible expenses list to know what can be claimed and deducted. They can claim medical expenses for any 12-month period ending in 2015 on their 2015 tax returns.

Are you taking care of loved ones?

The Disability Tax Credit is a major credit that can help offset costs if the client or a family member is suffering from an illness or experiencing a disability. The tax system also accounts for caregivers. So, if they’re living with a parent 65 or older or an infirm dependent, then there may be as much as $6,701 in additional credits they can claim.

Do you have a stock portfolio?

If clients lost money in the market this year, capital losses can be deducted to reduce tax liability. If they’re facing a big capital gain, help them review their portfolios now to see if they can take a loss to offset a gain and reduce liability. The transaction needs to happen on or before December 24 to qualify for the 2015 tax return.

Read: How you can help clients with tax-loss selling

Did you make any charitable donations?

Clients receive a 15% federal tax credit for the first $200 of donations and 29% for any amount more than that. Once they add in provincial credits, the tax savings can be between 40% and 50%. The First Time Super Donor Credit can be a good program if it’s been a while since they last contributed to a local charity, or if it’s their first time.

Originally published on Advisor.ca

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