If you’d rather (insert torturous activity here) than do your taxes, trust me, you’re not alone.
April is upon us, and that means it’s tax time! If your 2015 return has been prepared, filed and you’ve already spent your refund, congratulations – you are a much better person than me. I’m still trying to sort through receipts, invoices and… oh, never mind. I’ll worry about it next week :)Now, if you’ve been attending our #HowtoRefund Twitter Chats with H&R Block Canada, you’ve already been privy to a wealth of knowledge and advice from their tax experts. And this year, it’s easier than ever to get things done: you can DIY with H&R Block’s FREE Online Tax Software or visit your nearest H&B Block tax office and have an expert do the work for you. And step to it! There are less than three weeks to the deadline!
(Tax questions? Our third and final #HowtoRefund Twitter Chat is taking place on Tuesday, April 19th at 8PM EST. Tune in for last-minute tax advice and the chance to win Visa Gift Cards!)
I’ve had the pleasure of hosting the Twitter Chats with @HRBlockCanada, and while the tax experts were firing off answers, advice and more, I was busy jotting down some of the most frequently asked questions. Recently, I had a chance to sit down with Caroline Battista, Senior Tax Analyst with H&R Block Canada, and she kindly answered some of your most burning tax questions!
Q. What medical expenses can I deduct, and how do I claim them?
A. There are a number of medical expenses that you can claim for yourself, your spouse and your dependents including ambulance service, attendant care expenses, braces for a limb, crutches, dental services, a hospital bed, hospital services, laser eye surgery, an oxygen concentrator, a pacemaker, vaccines, glasses or contact lenses, rehabilitative therapy and sign language services. You cannot claim things like non-prescription birth control and over-the-counter medications. Athletic club fees, organic foods and purely cosmetic procedures also are not permitted as deductions. Best to check with the CRA on what can be claimed or check in with your local H&R Block representative. In order to claim these it is important to have proper documentation to be sure you can prove these expenses actually were paid. If you file with H&R Block’s Online Tax Software, you will be prompted to enter any medical expenses, and the calculations will be done automatically. If you are filing on paper, you may need to seek out the appropriate line item and make sure you do the calculations to know if you can claim the expense.
Q. What happens if I win a prize at my workplace, or through charity sweepstakes? Do I have to declare it?
A. Any prize or winnings that involve luck or chance are not taxable in Canada – this includes office pools. The only consideration I would recommend you take into account is if the prize was a capital property like a house, you should know that the prize will have an adjusted cost base equal to the fair market value on the day it was won. You would have to pay tax if you sold the house for more than the adjusted cost base as the money you make would be considered income.
Q. What are some of the most overlooked expenses? What do Canadians routinely forget to claim?
A. Credits are often missed because people don’t prepare early enough in advance to seek out what is available or are too overwhelmed by the research to look. A tax professional can really help you maximize your return and discover credits and deductions you may be eligible for. If you are going to look into them on your own however, there are several categories you can explore including medical expenses, children’s programs (physical activities, summer camp, Girl Guides, etc.), public transit, disability, home ownership and student support. People often don’t realize that you can claim the additional cost of gluten-free foods if you have diagnosed celiac disease, and medical marijuana if you are authorized to possess it for medical reasons, among others.
Q. Are sales of personal items on eBay or Kijiji considered “income?”
A. Yes, all income earned is income. Profit from these types of transactions may be considered business income or capital gains/losses depending on whether or not you are engaged in a commercial activity or just selling personal items that you decide you don’t want any more. You cannot claim capital losses on the sale of personal-use property.
Q. Are Tax-Free Savings Accounts (TFSAs) really tax-free? What is the annual contribution limit?
A. As long as you don’t over-contribute and exceed your limit, yes, TFSAs are totally tax free and you can make withdrawals from these accounts at any time. The maximum amount you can contribute to your TFSA is limited by your contribution room. Your limit is based on the number of years since 2009 you’ve been 18 years of age or older and a resident of Canada. You accumulate TFSA contribution room each year even if you don’t use your TFSA. To figure out how much you can contribute visit the CRA website and add up the dollar limits for each year you are eligible. For instance, if you’ve been over 18 since 2009 and never contributed to a TFSA your total contribution limit in 2016 would be $46,500.
Q. What are the tax credits and deductions for pensioners?
A. There are several credits and deductions available to seniors that you may not be aware of if you are newly over 65. A full list of offerings are here and it includes things like the age amount, pension income splitting and the pension income amount. Seniors also have access to the same credits and deductions that are available to all Canadians including public transit costs, disability credits and medical expenses.
Q. Help! I can’t file my taxes by the deadline. What should I do?
A. If you can’t file by the deadline, it is important to file as soon as you can afterward. Failure to file on time results in the CRA charging 5% of your 2015 balance owing as a penalty, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. That means the longer you wait the more interest and penalties you’ll pay on amounts owed. If you don’t know where to start, head into your local H&R Block office for help.
This tax season, wishing you a painless and profitable experience! Remember, there’s a reason Canadians trust H&R Block Canada year after year. With over 50 years of experience, they’ve honed their services to maximize your experience and your refund.