Wednesday, November 28, 2012

6 Tips in Preparing Your Own Tax Return

For two decades of preparing of T1 - Individual income tax returns during tax season, I find that following procedures made it easier for me to prepare them:

1.     Visiting CRA website
Before you start preparing your own income tax return, and especially if you are planning to prepare a paper income tax return, make sure to visit CanadaRevenue Agency (CRA) website first. Once you are there, check for new tax changes for the tax year you are filing. In addition, download and print a copy of the T1 General and the required T1 schedules.

2.       Check T1 General and T1 Schedules first
It is often that you do not remember every single related reportable income and deductible expenses you have during the year. But not to worry, by checking all the items that are listed on the T1 General and the required T1 schedules, these forms will remind you of all the taxable income you earned and deductible expenses you spent during the tax year.

3.       Where to Start Checking on your T1 General
Once you filled in most of the personal information on page one (1) of your T1 General, it is best to start checking for the required information of your income first, then deduction and then credits. There are different types of income, and some of them will require you to complete schedules to get the total amount of income. As to T1 deductions, and credits, some of these items can be done by completing appropriate T1Schedules.

4.       Most important T1 schedules to check first
Once you have checked the T1 General, the next most important schedules you have to check are the federal income tax and non-refundable deductions, Schedule 1 - Federal Tax and the provincial income tax and non-refundable deductions calculation schedules, 5010-C-S2 T1 General - BC428 (example for BC).  These two schedules will tell you how much taxes you owe after applicable non-refundable deductions have been deducted.

5.       Find all applicable income and deductions information and source documents
Now that you have checked all the items listed on your T1 General and applicable T1 schedules, it is time for you to find all related information, like T-slips, statements,  receipts and other related information to prepare for your T1 General tax return.

6.       Double check your completed T1 General before sending
Once you completed your T1 General, make sure to double check the information you provided. If you are not using tax preparation software, make sure to use a calculator or if it is not too much, make a simple spreadsheet Excel template to double check your work and to eliminate errors in the amount calculation.
Earla RiopelBSCom(USA), DipAcc(UBC)
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