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Top 5 Lessons Learned From First-Time Income Tax Filers

If you filed your own taxes for the first time this year, congratulations! You’re on the right track to financial freedom! At the beginning, you may have been a little anxious but you probably found out it was easy to file…especially if you used TurboTax!

If you are about to be filing your first ever personal income tax return, don’t worry, it’s not as complicated as people say it is, and to prove it, we’ve spoken to thousands and thousands of Canadian taxpayers and gathered from them the Top 5 Lessons Learned From First-Time Income Tax Filers:

1. Update Yourself on Tax Law Changes

Educate yourself on what areas of tax impact you, and keep yourself as up to date as possible with tax laws, and tax changes.  It is always good to be aware of the latest news as there are changes every year.  Even if you cannot stay up to date, or if you just have no interest in doing so, you can always rely on TurboTax to have blog posts related to tax changes for the upcoming year and the implications of those changes.

Since Canadian taxes are constantly changing and you can miss important credits and deductions you didn’t know you should be saving receipts for.  The best way to stay on top of all these changes is to simply stay informed and you can do this by following the Canada Revenue Agency’s website, the TurboTax blog, or event set up an alert n your computer or smart phone to capture all the articles related to “tax” and whatever else impacts you, such as “deductions”, “tax credits”, or “CRA”.

Of course, when you go to file your tax return at the end of the year, TurboTax software is always up to date on the latest tax laws and we make sure to keep you informed so you can be prepared.

2. Set Up a Checklist Now

Setting up a checklist to capture all the information that you need to track throughout the year, especially when you’re really busy with business or life and are not thinking about taxes (gasp).  You will need to track things which apply to you and your unique situation, such as; medical expenses, tuition, mileage, rent, home office expenses, property taxes, utilities, etc.

Some prefer to stick everything into a shoe box until tax time rolls around, while more organized Canadians will use a CRM to track their information, such as QuickBooks / QuickBooks self-employed, or even just an excel spreadsheet.

For the most part, your tax situation next year will likely be very similar to this year. Even if you have life changes – any of them – you can use the organization that you put in place this year to build on for all future years.  Even a little bit of organization and planning can go a long way.

If there are life changes, no matter what size, it usually means you may have additional filing requirements, or forms to complete to close off a business, or file and estate return.  No matter what the change, any alteration from the previous way things were done can cause stress, but it’s just a little more reading, asking questions and learning.

For instance, if you buy a house, you might want to consider the First Time Home Buyers Plan, or be surprised when you learn that you will start to get tax forms related to your mortgage, specifically related to interest paid.

Or, if you have a child, you will begin to incur child care expenses which you can claim, so knowing what applies to you and your situation is certainly beneficial.

Don’t worry about knowing tax deductions and credits related to life changes. TurboTax will remind you of life changes that impact your taxes by asking you simple questions and will give you the tax deductions and credits you deserve based on your answers.

3. File Your Taxes ASAP

Even if you owe taxes, file them on time and wait to assess the amount owed.

Did you get a tax refund this year? If so, you’ll want to file as early as possible next year so you get that cash even quicker! Your checklist and having your paperwork gathered together in one place will help you file early, so you can get your tax refund fast.

When you do file, remember to do so electronically with NETFILE. When you submit using NETFILE and have direct deposit set up – you can get your tax refund in as few as 8 days!

As for the slips, employers and payroll companies are required to send out T4s by February 28th.

4. Read This Year’s Tax Return!

Finally, it’s always good to take a look at your tax return after you’re done. Read it through and see what the various sections are so you can better understand your financial situation.

You may even notice things about your taxes that you never noticed before. Did you make any charitable contributions? Did you make any investments? How might you improve your financial situations by increasing those? Your tax return is a good record of your financial progress so give it a look.

Now that you’ve already done your taxes this year, following these tips and using TurboTax will help make filing your taxes even easier next year!

5. Doing It Right Makes ALL the Difference

When you know what you are entitled to claim, and you know that you have claimed everything and that when you file your tax return, that you pay the amount of tax that you are required to pay, and no more, there is satisfaction and pride at tax time.