One of the most stressful times of the year is tax season. It may seem odd since everyone must do their taxes, but many people get an irrational fear when it’s time to file. For some, they might be worried about the taxes they may owe, while others often wait until the last minute to get things done.
There’s no denying that some people worry or stress out about money, but there’s no reason to do so when it comes to taxes. The Canadian tax system might sound complicated, but filing is typically a straightforward process. Here are 5 tips to help you reduce stress during the tax season.
1. Know your deadlines
People who tend to procrastinate are usually the ones who stress out the most. There are multiple tax deadlines to be aware of, but only a few will matter to you.
● February 28 - The last day for employers to issue you your T4s, T4As and T5s
● March 1 - Registered Retirement Savings Plan (RRSP) contribution deadline for the previous year
● April 30 - Filing due date for the previous year’s tax return for individuals. Also, the balance due date (if any) for both individuals and those who are self-employed
● June 15 - Filing due date for the previous year tax return for self-employed individuals
As long as you know your deadlines, there’s no real reason to stress out. The RRSP contribution deadline is for the previous tax year. You can still make contributions throughout the year. April 30 is arguably the most critical date since that’s when your taxes and any outstanding balance is due.
Do not wait until the last minute to file, as that’s when people tend to freak out. Once you have all your documents ready, you should file your taxes to be done with them. Remember, the sooner you file, the faster you’ll get your refund (if any).
2. Gather all your documents
You can’t file your taxes without all your documents in place, so you should try to collect everything into a single folder (physical or electronic) as soon as possible. As you’re now aware, the deadline for any T4s, T4As and T5s from employers is February 28, so you should reach out if you don’t have them by March 1.
You’ll also want to gather any individual documents from your financial institutions, such as statements of investment income and RRSP contributions. These statements are easy to find since your account will typically have a section for tax documents. Any receipts you have from charity donations also need to be set aside since you can claim them.
With all your documents collected, you can easily organize them, so you’ll be ready to file. Once you get started, it’s just a matter of inputting all the numbers.
3. Dedicate uninterrupted time when filing
Admittedly, the process of filing your taxes is not fun, so that might be the reason why some people stress out. Assuming your taxes are simple to do, it really shouldn’t take more than an hour to complete. Even if you’re self-employed, it may only take an extra hour or two to get the paperwork done.
The best thing to do is to dedicate time to file your taxes. Pick a time slot where you won’t be interrupted by anything. If you have kids, you may want to file when they’re out or busy doing something else. By doing this, you can focus just on your taxes. If you’re still feeling stressed, take a break if you must. Just about every tax software autosaves so you can stop and pick things back up at any time.
4. Don’t panic if you owe taxes
Arguably the most significant stress factor is when it comes to taxes is any outstanding balance you may owe. Your taxes are assessed every year, so how much you owe (or get back) changes every year. Let’s say you do owe a balance, but you can’t pay it back due to your current financial standing. If you get in touch with the CRA right away and explain your situation, they may put you on a repayment plan with monthly installations. This will allow you to make payments that you can afford every month. The CRA can be quite reasonable if you’re upfront.
5. Seek advice if you need it
Here’s the thing about filing your taxes, there’s no reason you need to do things alone. Just about everyone uses tax software these days, making filing incredibly easy since you don’t need to do things by hand. If you’re still intimidated, there are various tax services, including professional accountants who can file on your behalf, so there’s nothing to worry about. All you need to do is gather all your documents and set up an appointment, preferably well before the deadline, to get things done.
The bottom line
As long as you take the time to prepare yourself, there’s no reason why you can’t get your taxes filed without feeling some anxiety. Go in knowing that doing your taxes isn’t so bad, and you’ll come out wondering why you ever stressed out in the first place.
Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. As a completely self-taught, do-it-yourself investor with no formal training, he makes money easy to understand for all Canadians. His specialties include personal finance, budget travel, millennial money, credit cards, and trending destinations.
Barry Choi is a paid spokesperson of Sonnet Insurance.