Prepare for income tax season now
It’s time to think about and get ready for your 2024 tax filing
Do you want to do it the hard way or the easy way?
If you have outdated contact information with an employer you worked for in 2024 or with the Canada Revenue Agency (CRA) and you don’t have an online CRA account, then you are choosing the hard way. If you haven’t set up direct deposits from the CRA, you might also miss out on money.
Every spring, we have to file an income tax and benefit return — the key word being “return.” The government wants to know if they need to “return” some of the income tax you paid. They also have numerous financial benefits, many specifically for people who earned a lower income.
Sometimes, you owe the CRA more income tax. This happens when your employer doesn’t take enough off your paycheques or you earned money from other sources where taxes were not deducted. Tip: if you know you will earn untaxed money or you want to make sure you get a tax return in the spring, you can request your employer to take off a little more income tax.
Don’t let fear of owing CRA stop you from filing. I did a friend’s taxes last year, six years worth! They hadn’t bothered to file thinking they probably owed the CRA money. In the end, CRA owed them over $8,000!
So even though your 2024 tax return isn’t due until April 30, it's best to start thinking about it now. You can do two things to reduce the amount of income tax you owe and possibly increase your refund.
1. Make charitable donations by February 28, 2025*. Tax-receipted donations help the charity and help you. You get a 75% credit for the first $200 in donations and 50% for donations above that. Send money to a cause you want to support or a local charitable organization. If you don’t need the credit now, you can carry forward tax donations for up to 5 years or give it to your spouse.
2. Consider putting money into RRSPs (Registered Retirement Savings Plans) by February 28, 2025. This helps by reducing your net income. You postpone paying taxes on this money until you take them out of the RRSP. Use an online calculator to see the tax savings.
For most people, one task that isn’t usually worth spending time on is collecting medical receipts. They need to be more than three per cent of your taxable income to give you a tax credit. A tax credit only helps you if you owe income taxes, so for seniors with only basic pension there is no benefit to claiming medical expenses.
The easy way
Sign into or register for My Account. It is very useful to have online access. It can be difficult to get back into your account if you forget your login or password, because you have to verify a lot of information with the CRA over the phone. If you are finding it impossible to regain access, you could reach out to your Member of Parliament’s office for assistance. Remember, it’s important to keep this account secure.
Update your personal information. It’s very important that the CRA has your correct address, phone number, email address, and marital status. The easiest way to update your information is through My Account. Your other options are by phone (1-800-959-8281) or mail. Mailing an address change form to the CRA can take up to three months to process. Your tax preparer can also update your personal information when they EFILE your return.
Set up or update your direct deposit. It is much quicker and safer to enroll for CRA direct deposit rather than get paper cheques. The easiest way to do this is through your bank — you can do it in your online banking portal or in person at your branch. You can also do it by logging into My Account or calling 1-800-959-8281.
Uncashed cheques from CRA. If you have an old cheque from the CRA, you can still cash it at any financial institution in Canada for no charge. Government of Canada cheques never expire. If the CRA tried mailing you a cheque at an old address, you might have uncashed cheques. Check online on My Account, phone 1-800-959-8281 or ask your tax preparer when they auto-fill your return.
Tax slips. You should receive most of your tax slips by the end of February. Employers are required to send employees T4 or T4A slips by Feb. 28. This means they could put them in the mail on Feb 28. If you have an online portal for pay stubs, your T4 will likely also be found in that portal. You also get slips for pension, interest income, tuition, and benefits like EI, AISH, and Alberta Works. Current and past years’ tax slips will also show in your CRA My Account. You can download and print them. You or your tax preparer can also auto-fill the information from the CRA directly into a certified tax program.
Filing. Filing opens the third week of February for 2024 returns and they are due by April 30. Filing on time will avoid delays to refunds and benefits. Also, if you owe income tax to CRA, this is the deadline to pay. Late payments will be subject to late fees and interest.
If you haven’t filed taxes from previous years yet, you should do them as soon as possible. In March and April, tax preparers will be busy doing 2024 tax returns. If you have modest income and a simple tax situation, you may qualify for service at a free tax clinic. The Stanley Milner Public Library hosts a monthly walk-in tax clinic. The Alberta Avenue Community League accepts drop-offs year round: email taxclinic@albertaave.org.
If you want to know more, check these online lessons on the Canadian Tax System.
*In December, the Goverment of Canada extended the donation deadline from December 31, 2024 to to February 28, 2025.
Canada Revenue Agency (CRA)
1-800-959-8281
Charitable donations
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Government of Canada announces extension of 2024 charitable donations to February 28, 2025!!
Excellent information. I also know people who did not file. In the end, they got money back.