6 tax-filing tips for first-time taxpayers

November 6, 2014

Filing tax returns can be overwhelming, even for the most experienced taxpayers. If you're a first-time taxpayer, here are six tax-filing tips to help make the process go smoother.

6 tax-filing tips for first-time taxpayers

1. Determine whether you need to file

The first step is to decide if you need to file a tax return. Gross income, age and filing status are the three most important things you need to take into consideration.

  • The law requires that you file a tax return once you have reached a certain income level. However, it's still a good idea to file for a refund to take advantage of tax credits.

2. Stay organized

Keep a checklist of what documents you need and stay organized to save time. Put together a tax folder and keep it in a place that's easy to access.

  • In addition to earnings statements, don't forget to add other relevant documents to the tax folder. That includes such things as proof of investment earnings or additional income.

3. Refundable or non-refundable?

Before filing a tax return, make sure you know the difference between credits – which may be refundable or non-refundable – and tax deductions.

  • A deduction will lower your taxable income and bring down your tax liability, which can be further slashed through tax credits.
  • Using a refundable credit will allow you to decrease the owed amount and increase the refund. In fact, it is possible that you may qualify for a higher refund than your tax liability.
  • Non-refundable tax credits, also known as personal amounts, are typically available to all taxpayers.

4. Ask for advice

To avoid errors in filing your tax return, consider seeking professional advice from a tax specialist or an accountant.

  • Online software that can guide you step by step through your filing process is another helpful option, but could be confusing if you're not familiar with how to fill out tax forms.
  • If you're a student, cross-reference your return with that of your parents. There may be tax advantages to filing as a dependent.

5. Don't overlook deductions

Make sure you include any charitable contributions, job search expenses or childcare credits.

  • Earned income tax credits, along with local and national sales taxes, may also be considered deductions. You'll find a complete list on the Canada Revenue Agency website,  along with all the provincial or territorial deduction forms.

6. File on time

Filing tax returns for the first time can be intimidating, but it's important to file on time.

  • If you're unsure about the deadline, check with the Canada Revenue Agency. Missing the deadline can result in serious penalties. Even worse, they may decide to audit your return, which is extra stress and scrutiny you don't want.
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