The 3 best tax tips to help you prepare for this tax season.

With the new year finally here, that can mean two things: new resolutions and the upcoming tax season.

We can make a pretty good guess about which option you’d rather focus on. That’s why we came up with our three best tips for the upcoming tax season that you should keep in mind.

Our top tax tips are:

1. Whether you think you won’t owe taxes, or made little to no income this year, you should still file your taxes.
2. It’s best to file your taxes early, but it’s crucial to file your taxes on time.
3. Maximize your contributions to “tax advantage” savings accounts.
4. Bonus tip: Check your previous tax returns for missed credits and benefits with a Free Second Look® from H&R Block. When our Tax Experts reviewed client returns filed elsewhere, they helped more than half of those clients get an additional $2,900 in refunds on average*.

Keep reading to learn how to get the most out of your 2024 return with these tips!

Tip 1: Whether you think you won’t owe taxes, or made little to no income this year, you should still file your taxes.

We’ve heard many people say that they know they won’t owe additional income taxes to the government, so they can’t be bothered to file their taxes. We’ve heard others say that they’ve earned little income, and therefore don’t believe it’s worth filing. This mindset is keeping Canadians from what could be a big tax refund.

When filing taxes – sure, owing or not owning the government additional taxes is a big part of it, but don’t forget that filing taxes is also the only way Canadians can access many credits, benefits, and services throughout the year. 

Let’s start with refundable tax credits. These are the tax credits that equal a dollar amount that you might get back in the form of a cheque or direct deposit in a lump sum or in quarterly or monthly instalments. This isn’t to be confused with non-refundable tax credits, which simply help lower any taxes owing (which is nice if you owe additional taxes!) If you don’t file a tax return, you don’t get these benefits. Refundable tax credits include:

• Canada Carbon Rebate – a quarterly payment to offset paying a carbon tax on daily items, like gas. This can be around $500 annually to individuals and more for families.
• Canada Workers Benefit – for those working but not making a liveable wage, the CWB can pay out up to $1,590 for individuals.
• GST/HST Credit – at a certain income level, Canadians can also qualify for quarterly payments that offset the GST/HST they pay on everyday items. Single people can expect up to $533 for the year and families can earn more.
• Canada Child Benefit – a monthly payment to parents for children 17 and under. It equates to about $7,997 per child under 6 and $6,748 for children 6-17 for the year, though it’s income-dependent.
• Canada Dental Care Plan (CDCP) – The CDCP is the most comprehensive federal dental plan we’ve ever seen in this country, giving underinsured Canadians access to services like dental cleanings, x-rays, fillings, root canals, dentures, oral surgery and more, but you need to register for this plan, and a tax return is part of the eligibility criteria to show your family net income is $90,000 or less. 

If you don’t file a tax return, you don’t get these credits and benefits, which, for someone who qualifies for all these examples (max benefit, single individual with one child under 6) means an additional $10K+ a year! And that’s just on the federal side – there could be provincial credits and benefits available to you to help even more.

Some years, the federal or provincial government provides an additional bonus payment, for things like inflation, which is only given to those who have filed their tax return.

Additionally, if you wanted to start a registered savings account, your tax return gives you guidance on how much you’re allowed to invest without owing more taxes.

Tip 2: It’s best to file your taxes early, but it’s crucial to file your taxes on time. 

There are many advantages to filing your taxes early. You don’t feel rushed and are therefore less likely to forget something. If you owe taxes, you have some time to get a payment plan in place. If you’re getting a refund, you’ll get it quicker. But whether you’re an early bird or last-minute filer, getting your taxes in on time is a crucial way to avoid paying penalties. 

Canadians need to submit their tax returns by April 30^th every year, unless that day falls on a weekend – then it’s the next Monday. This is also the day any taxes owing are due. If you don’t pay it by the April 30 deadline, the CRA will charge you a penalty of 5% of your taxes owing starting May 1, and 1% additional for each full month that it’s late to a maximum of 12 months. 

If you owe $2,000 after the tax deadline passes, you’ll owe an extra $100. If it takes you 10 full months to pay your taxes owing, you’ll owe an additional penalty of $200, for a total additional amount of $300 – effectively taxing yourself an additional 15%! Plus, you’ll owe interest on the amount owing.

Tip 3: Maximize your contributions to “tax advantage” savings accounts.

While there are all kinds of bank-administered savings accounts, there are several in Canada that help lower your taxable income, meaning if you earn $60,000 annually, and put $8,000 into the account (for example), the government considers your income to be $52,000 instead of $60,000, thus lowering your tax bracket. There are also accounts where when the time comes to withdraw the funds from the account, including any income or interest earned in the account, it’s not taxed as income that year.

There are limits and guidelines for investing in accounts, and each has different benefits.

• Registered Retirement Savings Plans (RRSP): Check your most recent Notice of Assessment or Reassessment to find out your contribution limit. It varies depending on your earned income the prior year, whether or not you’re a member of a pension plan at work and whether you have unused contribution room to carry forward. You can contribute to your RRSP up to the beginning of March annually, with March 3 being the deadline in 2025.
• Tax-Free Savings Accounts (TFSA): This one has a set amount you’re allowed to contribute, which is $7,000. However, if you haven’t contributed to a TFSA before, you may have unused contribution room to carry forward. If you have the funds, that’s a great place to watch your investment grow, tax-free.
• Registered Education Savings Plans (RESP): Not only can you use this to save for your child’s education, tax-free upon withdrawal, but the federal government matches up to 20% of your contribution (up to a limit of $7,200 per child) through the Canada Education Savings Grant! Free money!

Bonus tip: Be certain that you have received all the credits and benefits you’re entitled to in your previous tax returns.

Half of Canadians who have had H&R Block Tax Experts review their previous tax returns using our Free Second Look® service found that they were leaving money on the table, and the average amount found by our Tax Experts was $2,900*! Let us find you more money.