5 tips for more accurate taxes and better returns

There are plenty of things to consider when it comes to taxes. That's why when tax season rolls around you'll want to keep these 5 tips in mind to ensure you're doing it properly.

5 tips for more accurate taxes and better returns

1. Keep a logbook

Being neat and organized makes a difference when doing your taxes, which is why keeping a logbook for all of your expenses is essential.

  • You're most likely to be questioned for such things as vehicle and entertainment expenses, for example, unless you can provide specific details.
  • Even if you're an insurance salesman and you write off 90 per cent or more of your car expenses for business purposes, you're likely to draw attention.
  • Don't think being an accountant helps your case. Simply because of your occupation you might grab the taxman's interest by writing off over half of your expenses.

Your best defence?
Keep a logbook where you jot down, for example, the number of kilometres driven for business. What's more, for entertainment expenses keep all receipts and a record of who you met and why.

  • Keep in mind the Canada Revenue Agency (CRA) could actually call the people you name. If none of the 20 people you named recall going out to lunch with you, you're asking for trouble.

If it's already too close to tax time, ensure that as you enter the amounts on your tax form from your receipts, you record the details about each one as honestly as you can recall – but be prepared if the CRA questions you about what they are.

2. Eat, drink and deduct?

Say you're on a deadline at work and can't get out for lunch. If you order in and eat that meal at your desk while you're working, this "meal on premises" is deductible.

  • The key to taking advantage of these deductions is to document carefully and save your receipts. If you're not "the organized type" – the kind of person who stuffs receipts into any old place, then you're needlessly missing out.

3. Put the family to work

Although you might get a second look from the tax man if you put your eight-year-old on the payroll, teens and tweens are perfectly capable of helping out.

  • It's considered perfectly acceptable to pay family members for everything from running errands to answering the phone, provided you offer them a reasonable hourly wage and deduct the expense.

4. Keep it neat

It's worth pointing out that just having a neat return, with numbers that add up and no receipts missing, is going to stand you in good stead. All it takes is one illegible number for your return to get kicked out of the system and onto a real person's desk.

  • Remember to include all necessary documentation and that you don't leave out mention of even a tiny bit of income on your return.

The CRA will match your statement of income earned with the copies of T-4s and T-5s in their possession. Woe betide you if they find a discrepancy!

5. If you're audited get professional help

Even if you prepare your tax returns yourself, don't face the CRA without a professional in your corner. Why? The CRA "is hoping that you pay just out of fear" of being audited, says Kurt Rosentreter, a senior financial advisor with Berkshire Securities, Inc.

  • Don't just randomly pick a tax preparation specialist out of the phone book. Get a recommendation from someone you know who has had success with that individual.
  • Look for an accountant or lawyer with experience in CRA negotiations and audits.

Taxes are a headache, but they're even worse when you're disorganized. By staying on top of things and being methodical, your chances of paying more or getting audited by the CRA, are much lower.

The material on this website is provided for entertainment, informational and educational purposes only and should never act as a substitute to the advice of an applicable professional. Use of this website is subject to our terms of use and privacy policy.
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