How to Read/Review Your Tax Return

Understanding tax returns: A section-by-section breakdown

To file an accurate income tax and benefit return, you must first know the different sections and the information that's needed for each. After all, you can only find errors when you know what details to examine. 

Here’s how to review different sections of your tax return.

Identification and other information

In the personal information section of your tax return, ensure the following:

• Your full name is spelled correctly.

• The current address is accurate for receiving correspondence from the CRA.

• The correct Social Insurance Number (SIN) is linked to your tax records.

• Your marital status is accurate—whether single, married, common-law, separated, divorced, or widowed.

• Be sure to report any changes in marital status during the tax year.

Total income

In this section, you must include income from various sources, like employment, investments, self-employment, and rent. The sum of all these amounts helps you fill out the total income on line 15000 of your return.

Cross check all these amounts with the appropriate T-slips, such as the T4 slip for employment income and the T5 slip for investment income. The CRA typically uses these tax forms to flag any discrepancies in your reported income. 

It’s also essential to include income where you didn't receive a T slip—such as freelance work or tips—to avoid potential reassessments and penalties from the CRA. 

Net income

Claim all eligible tax deductions, including any carry-forward balances from previous years. Deductions help determine your net income and reduce your taxable income—the amount used to calculate your taxes payable. Some common deductions include: 

• Registered Retirement Savings Plan (RRSP) contributions.
• Child care expenses.
• Union or professional dues.

Tax credits

While deductions and credits both maximize your tax savings, they help in different ways. Deductions reduce your taxable income, which in turn lowers the amount of income that is subject to tax. Conversely, tax credits directly reduce the amount of tax you owe.

Let’s look at the 2 types of tax credits—refundable and non-refundable: 

Claim all eligible credits for maximum tax benefits. Make sure you keep all relevant documentation and receipts to support your claims.

Refund or balance owing

This section calculates the total tax payable after accounting for all deductions, credits, and tax payments you made throughout the year.

You will receive a refund if your tax credits and deductions exceed your tax payable. Conversely, if you paid less than your tax payable, you’ll need to make additional payments to cover the shortfall.

To determine the correct amount, report all sources of income, claim eligible deductions, and account for any instalment payments or additional tax payments made during the year.

How to review tax returns for common mistakes

Here are 7 tips on how to read your tax return summary in Canada to catch common mistakes before you file.

1. Look for duplicated amounts. Double check that amounts reported on your T4 slips, such as union dues, are not duplicated elsewhere on your return.

2. Claim all eligible amounts. Go through your financial records to ensure you didn’t miss any eligible deductions or credits. This includes less common deductions like medical expenses or moving costs. 

3. Check for accuracy in dependants’ information. If you have dependants, ensure their information is correctly entered. Verify that you are claiming the appropriate credits and benefits related to them, such as the child care expenses deduction.

4. Review principal residence disposition. If you sold your principal residence during the tax year, report it on your tax return to claim the principal residence exemption.

5. Verify capital gains on investments. If you held, traded, or exchanged a capital property like stocks, bonds, or real estate, report your capital gains (or losses) on 5000-S3 Schedule 3.

6. Keep organized records. Back up the information included on your return and ensure all receipts and supporting documents are well organized and accessible for 6 years after filing your return. Misplaced receipts can result in missed deductions and credits.

7. Review for consistency. Compare your current return with your previous year’s return to ensure you’re claiming all eligible carryforwards.

To make sure you don't miss adding any information, you can use the Auto-fill My Return (AFR) feature in TurboTax that automatically fills in parts of your tax return.

How to correct mistakes on your income tax and benefit return

If you discover errors on your tax return after receiving your Notice of Assessment (NOA), here are 2 ways to correct those mistakes.

1. Check your CRA My Account

CRA My Account gives you quick access to your tax information, including your NOA, carry-forward amounts, and account balances.

If you see any errors or discrepancies while checking your account, use the “Change my return” feature to make adjustments. You can enable notifications to monitor the status of your changes and receive any correspondence from the CRA regarding your adjustments.

For a faster and easier way to change your tax return, you can also use the ReFILE option available within TurboTax.

2. Use the T1-ADJ form

Another way to correct mistakes on your T1 return is by filling out the T1 Adjustment Request (T1-ADJ) form. After downloading the form from the CRA website, fill it out with the necessary corrections. Include details such as tax year, the line numbers from your return that need correction, and the revised amounts.

Send the completed T1-ADJ form and any supporting documents to the appropriate CRA tax centre.

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