Common tax filing mistakes and how to avoid them.
March 25, 2021
Between tax law changes and unpredictable life circumstances, it can be challenging to keep track of everything that might impact your tax situation. It’s common to make mistakes like miscalculations, marital status errors, or even typos when it’s time to file. Here’s what to watch out for.
Missing or mistaken information.
Some of the most common tax mistakes include double-reporting your income or not accounting for cash you earned from a side gig (that’s right, tips are taxable!). Unclaimed income can result in significant penalties, and information missing from your return can be costly.
The government helps you save time and avoid data entry errors with the Canada Revenue Agency (CRA)’s Auto-fill my return (AFR) service and Revenu Québec’s Téléchargement des données fiscales (TDF) service. These services allow you to securely download your information slips (such as your T4 or RL-1 slip) and other tax-related information from the CRA or Revenu Québec website into your tax return. To learn more about these services, visit the H&R Block Online Help Centre.
It’s also common to miss key information from your tax slips, which can impact your refund.
For example, if you have investments, make sure you keep track of your adjusted cost base (ACB). The ACB is the cost of an investment plus any expenses you paid to buy it, such as commissions and legal fees. If the brokerage you used to manage your investment doesn’t know its original cost, they might leave box 20 (the cost or book value) empty on your T5008 slip. If you don’t provide this information on your return, you could be overstating your capital gains, which would increase your tax owing or lower your refund.
The best way to avoid accidentally missing information on your return is to consult a tax professional or have someone you trust read over your documents. You can always find an H&R Block office near you to have a Tax Expert help you with your return (in person or remotely). If you’re using H&R Block’s Do It Yourself Tax Software, you can have a Tax Expert double-check your return before you file by booking an Expert Review!
Another common mistake is not claiming the benefits and deductions that you’re entitled to, missing out on the opportunity to get the highest refund.
For example, if you moved this year, you might be eligible to claim your moving expenses, which is often missed. If you sold your home to move, your profit is usually eligible for the principal residence exemption, meaning you won’t owe taxes on the capital gains from the sale. However, you’ll still need to report the details of the sale on Schedule 3 and form T2091(IND) Designation of a Principal Residence by an Individual. If you’re a Québec resident, you’ll also have to complete form TP-274-V: Designation of Property as a Principal Residence. If you don’t fill out these forms and the CRA or Revenu Québec finds out that you sold your home, the principal residence exemption could be denied and you’ll miss out on this deduction.
Childcare expenses and disability tax credits are a few more common credits and deductions that are missed every year. Additionally, many medical treatments, devices and even items prescribed by medical providers but not completely covered under personal insurance can be claimed as medical expenses. This can include prescription contact lenses, glasses, and hearing aids.
By filing with H&R Block, you can be sure you’ll get the most out of your return, with our Maximum Refund Guarantee. Whether you file with a Tax Expert or if you use our Do It Yourself Tax Software, you’ll be matched with all the credits and deductions you’re entitled to. You can also sign up for our newsletter to get the latest tax news delivered straight to your inbox, or keep checking the H&R Block Tax Tips Blog for updates from the CRA and Revenue Québec. For example, if the CRA announces a new federal benefit, you’ll find out here!
Did you miss something?
If you realized that you’ve missed a few things from previous years that you could have claimed, there’s good news! You can request to amend specific lines on your past federal and/or Québec returns, up to 10 years prior. We suggest waiting until you receive your notice of assessment before asking for changes to your return.
H&R Block’s ReFILE service, part of our Do It Yourself Tax Software, allows you to adjust and re-file a return to the CRA or Revenu Québec without submitting any paper forms. This service is available for 2017, 2018, 2019 and 2020 returns. You can also find an H&R Block office near you and have one of our Tax Experts take a Free Second Look at up to three of your past returns, to check for errors and overlooked deductions.
Ready to file? Get the most out of your return with help from the largest network of reliable Tax Experts. Choose one of four convenient ways to file: File in an Office, Drop-off at an Office, Remote Tax Expert, or Do It Yourself Tax Software.