Common Mistakes People Make With Their Taxes
Preparing and filing taxes can be a challenge if you’re unfamiliar with how things work, so it’s best to hire a tax professional that can guide you through the process and provide optimum solutions. These tax-efficient strategies are tailored to help you save time and money.
However, if you decide to file taxes by yourself, mistakes can get made during the tax planning stage which could lead to a delay in receiving refunds or even getting audited by the CRA.
So, to help you avoid some basic errors that could prove costly, Darren Bruce, CPA, Professional Corporation, has compiled a list of the most common mistakes people make with their taxes.
1. Incurring unnecessary penalties
These penalties can often get avoided by staying current, but if things do fall behind, you should still file your taxes. By not filing your return, you’re going to incur penalties. Therefore, we suggest that you file even if you cannot pay at the moment. We can then help you navigate penalty minimization.
2. Not using RRSP as a critical tool to minimize tax
Many people think they should contribute the maximum amount to their RRSP, but it can be counterproductive. Many clients have too much cash in their RRSP, so while extracting money, they end up paying more taxes than what they saved when they contributed in the first place. We work with clients to ensure their RRSP planning gets customized to their needs.
3. Incorporating too late
Many entrepreneurs incorporate their companies a year or two after paying too many taxes. Incorporating is a good idea if a client plans to grow their business to be more than just a job. We help individuals determine if and when is the best time to incorporate.
To avoid these and other mistakes, reach out to the experts at Darren Bruce, CPA, Professional Corporation. As experienced chartered professional accountants in St. Catherines, Ontario, our services include accounting, bookkeeping, payroll, tax planning/ preparation, and financial planning.
We serve clients across St. Catharines, Niagara Falls, Toronto, Markham, Vaughan, Hamilton, Mississauga, and Brampton. We also cover Kitchener, Burlington, Oakville, London, Barrie, Oshawa, Huntsville, and the surrounding areas.