Personal Finance

Learning how to do taxes

  • Last Updated:
  • May 12th, 2019 10:07 pm
[OP]
Jr. Member
Apr 20, 2011
199 posts
20 upvotes
Toronto

Learning how to do taxes

All these years, I have been asking my friends help to do my taxes and he just gladly help. I am thankful to him. But as the life is moving on, he is getting busier and so am i. I just don't want to rely on him to do my taxes.

So, I want to learn how to do taxes by myself. I have already signed up for simpletax.ca. But the problem that i have is i don't know what things should be used for taxes and what not. Documents that I am aware that are useful are
  • T4
  • RRSP Contribution. For the given year and first 2 months of following year.
  • TFSA Contribution/Withdrawal
  • Property Taxes
What else ? I have been told by some clinic that i can claim payments made towards medical tests as well? Moreover, someone told me that the interest paid towards OSAP can also be claimed.

So the problem is that even though simpletax.ca is super simple/useful. I don't know what documents to maintain for next year and what not.

Is there any comprehensive guide?

P.S: I have 0 finance experience.
21 replies
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Mar 18, 2006
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hyph3n wrote:
May 9th, 2019 9:10 am
All these years, I have been asking my friends help to do my taxes and he just gladly help. I am thankful to him. But as the life is moving on, he is getting busier and so am i. I just don't want to rely on him to do my taxes.

So, I want to learn how to do taxes by myself. I have already signed up for simpletax.ca. But the problem that i have is i don't know what things should be used for taxes and what not. Documents that I am aware that are useful are
  • T4
  • RRSP Contribution. For the given year and first 2 months of following year.
  • TFSA Contribution/Withdrawal
  • Property Taxes
What else ? I have been told by some clinic that i can claim payments made towards medical tests as well? Moreover, someone told me that the interest paid towards OSAP can also be claimed.

So the problem is that even though simpletax.ca is super simple/useful. I don't know what documents to maintain for next year and what not.

Is there any comprehensive guide?

P.S: I have 0 finance experience.
Disclosure: I am not an expert.

Ok with that out of the way. From my experience, you seem to have a very solid grasp of what you need (basics) in order to file taxes. When you get into extras like the medical payments etc, there are thresholds to meet before they become relevant. For example, I know years ago it was around say $3000 in medical payments out of pocket before any impact would be taken into consideration to your taxable income etc.

Depending on who you bank through, or have retirement savings through, there is usually a tax page that gives you all of that years tax documents. So if you hold RRSPs, EPSP, DCPP etc they will show you for say 2019 tax year here are all your slips to claim.

SimpleTax is great as it does guide you mostly through the average persons taxes. Which, based on what you're sharing, seems like you're an average tax example.

Why don't you ask your friend for an hour or two next year to sit down with them and watch what they do. Pay them for their time of course and then ask them what you need to go through in order to do this yourself. I'm sure they would be more than willing to help if they have been helping you all of these years.

https://forums.redflagdeals.com/tax-tim ... y-1922473/
https://www.canada.ca/en/services/taxes.html is a decent resource as well.
[OP]
Jr. Member
Apr 20, 2011
199 posts
20 upvotes
Toronto
cyphon21 wrote:
May 9th, 2019 10:14 am
Disclosure: I am not an expert.

Ok with that out of the way. From my experience, you seem to have a very solid grasp of what you need (basics) in order to file taxes. When you get into extras like the medical payments etc, there are thresholds to meet before they become relevant. For example, I know years ago it was around say $3000 in medical payments out of pocket before any impact would be taken into consideration to your taxable income etc.

Depending on who you bank through, or have retirement savings through, there is usually a tax page that gives you all of that years tax documents. So if you hold RRSPs, EPSP, DCPP etc they will show you for say 2019 tax year here are all your slips to claim.

SimpleTax is great as it does guide you mostly through the average persons taxes. Which, based on what you're sharing, seems like you're an average tax example.

Why don't you ask your friend for an hour or two next year to sit down with them and watch what they do. Pay them for their time of course and then ask them what you need to go through in order to do this yourself. I'm sure they would be more than willing to help if they have been helping you all of these years.

tax-time-im-public-accountant-so-ask-me ... y-1922473/
https://www.canada.ca/en/services/taxes.html is a decent resource as well.
I have been asking him. Even offered him a decent steak meal but he is just too busy now a days :)

Thanks for resources, def going to read up on that.
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hyph3n wrote:
May 9th, 2019 11:07 am
I have been asking him. Even offered him a decent steak meal but he is just too busy now a days :)

Thanks for resources, def going to read up on that.
No problem! I was very fortunate as a kid, to watch my mother actually do our taxes long form. Since I wasn't a pesty child, she took the time to teach me a few things along the way. My wife is self employed, so we go to someone now but it's always a good eye opener to see all of the numbers that impact your life through out the year.
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You could invest a small amount of money into the Turbotax program (or even try some of the free programs out there) and go through each line as a study to understand what it means. You could also try finding some tax books at your local library. Just depends how deep you want to go.
[OP]
Jr. Member
Apr 20, 2011
199 posts
20 upvotes
Toronto
cyphon21 wrote:
May 9th, 2019 11:18 am
No problem! I was very fortunate as a kid, to watch my mother actually do our taxes long form. Since I wasn't a pesty child, she took the time to teach me a few things along the way. My wife is self employed, so we go to someone now but it's always a good eye opener to see all of the numbers that impact your life through out the year.
As an international student, no one taught us these things at the university :) ... I wish universities incorporate courses to teach such practical life skills.
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hyph3n wrote:
May 9th, 2019 11:28 am
As an international student, no one taught us these things at the university :) ... I wish universities incorporate courses to teach such practical life skills.
Canadian students aren't taught how to do their taxes in university, or anywhere in the education system either. I just learned on my own using TurboTax and now Simple Tax. It is very easy...it's basically just data entry.
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Jan 9, 2011
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For first timers doing it on their own, I recommend picking up a paper package (it comes with a guidebook that explains everything so it is easy to understand) from the post office, filling it in with a pencil and calculator, and snail mailing it. Doing it on paper is surprisingly easy, and you get a much more comprehensive understanding of how everything works than you do when using software. Armed with this knowledge, you can be more confident that you're doing everything correctly when you start filing online in future years.

You don't need to worry about TFSA contribution/withdrawal, you already paid the taxes on that money when you earned it. Property taxes are not deductible, nor are medical expenses unless they are a rather large amount. The guide will explain everything.
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Sep 23, 2007
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hyph3n wrote:
May 9th, 2019 9:10 am
All these years, I have been asking my friends help to do my taxes and he just gladly help. I am thankful to him. But as the life is moving on, he is getting busier and so am i. I just don't want to rely on him to do my taxes.

So, I want to learn how to do taxes by myself. I have already signed up for simpletax.ca. But the problem that i have is i don't know what things should be used for taxes and what not. Documents that I am aware that are useful are
  • T4
  • RRSP Contribution. For the given year and first 2 months of following year.
  • TFSA Contribution/Withdrawal
  • Property Taxes
What else ? I have been told by some clinic that i can claim payments made towards medical tests as well? Moreover, someone told me that the interest paid towards OSAP can also be claimed.

So the problem is that even though simpletax.ca is super simple/useful. I don't know what documents to maintain for next year and what not.

Is there any comprehensive guide?

P.S: I have 0 finance experience.
The name of the game is simply knowing what you should report as income and what you can deduct as expenses. Also, credits may vary year by year. Like 2018 we were introduced to the Climate Action Incentive. We used to be able to claim credits on public transit passes but no more. Also, some credits are Provincial, some are Federal.

I am not here to talk you out of doing it yourself but based on the things you listed, your situation is quite straight forward. For anyone with more complicated cases, I really recommend doing some research or hiring an accountant. It's 2019 and you should be working with a software. A lot of software will actually guide you with questions such that you minimize the risk of missing something. Also, if you register for CRA Online Account, you can download a lot of the carryforward numbers into your software which will save a lot of time. In fact, when an employer reports on your T4, or when a bank reports for your T5/T3s, these information become available to download from the CRA Online into your software.

The first 2 sections or so are really just to tally up your TOTAL Income. For the average person, their main source of income is employment income. Employers have to issue T4s to show how much you earned in gross, how much tax was deducted on your behalf, how much CPP/EI you paid etc. Some people may also have investment income, dividends, interest and trust income (T3,T5). If you are retired, you pay also have OAS and T4(P)s. Basically your first task is to sum up your TAXABLE INCOME. For the average person, you only need to fill in a few sections. For a lot of people, if your company deducts RRSP for you, all the information will be on the T4.

If you operate a sole proprietorship or have rental properties, or have gains from capital gains/losses, there is a section for reporting such income. Disposal of a property is also a big event that you should be aware of.

Certain expenses can be deducted from your taxable income. These include moving expenses, union dues, professional dues etc. These 3 are the more common ones. You can scroll through a software to see if you have any of such expenses.

Then there are certain carry forward amounts that you can use to reduce your taxable income for the year. For example, capital losses can be carried forward. You can use up losses from prior years to reduce your income.

So now you have your NET INCOME. From this amount, then you can apply for certain credits like age credits, disability, dependents etc. A lot of credits have an income cap. Like you can get a property tax credit if your income is less than a certain number and many credits scale with your income. Using a software is the best as you just plug in the number and let the software worry about the income caps on credits.

So on your tax return, you are basically declaring what your taxable income is and what credits you qualify for. You have a number and this is your tax payable for the year. But most people with employment income would have had income taxes deducted from their payroll. If the total taxes deducted from your employer or other sources is more than what you should have paid, then you get a refund. If your total tax is less than what has been remitted, then you pay the balance owing.

RRSP contributions can be deducted from your income and this is common. Everyone has a deduction limit. If you register for CRA Online, you can easily track what the balance is. The CRA Online also tracks your TFSA limits. The literature on RRSP is quite extensive as it is a common topic.

Speaking about common topics, I only wrote about the common stuff. There's plenty of nitty gritty things and describing every tax rule would be a very long read.
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cyphon21 wrote:
May 9th, 2019 11:18 am
No problem! I was very fortunate as a kid, to watch my mother actually do our taxes long form. Since I wasn't a pesty child, she took the time to teach me a few things along the way. My wife is self employed, so we go to someone now but it's always a good eye opener to see all of the numbers that impact your life through out the year.
I still do my taxes long form, with the booklet and everything. Takes about and hour of if your used to it
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User455957 wrote:
May 10th, 2019 7:13 am
I still do my taxes long form, with the booklet and everything. Takes about and hour of if your used to it
That's amazing! Kudos to you for doing them that way.
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gbill2004 wrote:
May 9th, 2019 11:36 am
Canadian students aren't taught how to do their taxes in university, or anywhere in the education system either. I just learned on my own using TurboTax and now Simple Tax. It is very easy...it's basically just data entry.
We were taught how to do taxes in high school as part of the Consumer Education curriculum. However, at such a young age, it wasn't super helpful because some people didn't have income and maybe couldn't relate to what was being taught.
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choclover wrote:
May 10th, 2019 11:47 am
We were taught how to do taxes in high school as part of the Consumer Education curriculum. However, at such a young age, it wasn't super helpful because some people didn't have income and maybe couldn't relate to what was being taught.
Interesting. When I was in high school I was not taught how to do taxes.

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