This has been a really rough week for Daniella Florica, and it’s only Wednesday. The 32-year-old is an accounting manager with Nasim and Associates, a tax firm based in Kitchener-Waterloo, and technical issues with the Canada Revenue Agency’s (CRA) site have made it impossible to get her work done properly.
“On Monday, I was unable to sign into Represent a Client, which I need to do multiple times per day for my job,” she told VICE. She kept trying to sign in, but couldn’t. On Tuesday the CRA tweeted that their site was back up and running but she still couldn’t get in. She was also getting error messages saying she wasn’t authorized, which wasn’t true.
She’s not the only one who has had to deal with this frustration. Several CRA services have been down at some point this week. The main website was offline Sunday, Monday and Tuesday and that meant people couldn’t use most features, as well as the mobile apps. Many couldn’t file income tax returns, report changes or update direct deposit info. Even after they were available again, the backlog created issues.
The CRA sent a statement to VICE explaining that “the service outages were caused by computer hardware and server configuration issues.” The federal revenue agency says the bulk of its technical issues were resolved by midday yesterday. It goes on to say that it “regrets any inconvenience this has had on taxpayers as well as tax preparers.”
It’s crunch time for firms like Florica’s and for anyone trying to get their income taxes done before the April 30 deadline (if you’re self-employed you have until mid June). This latest stress comes on top of anxiety that a lot of young people feel around tax time. A United Way Worldwide survey suggests that 74 percent of millennials find filing returns stressful. The number one reason for that panic? They’re afraid of making a mistake.
To minimize the chances of making an error and to save you time and money, VICE spoke with Alyssa Furtado, who is the co-founder and CEO of the personal finance portal Ratehub.ca. Here’s her advice for young tax filers:
No snail mail
If the CRA’s technical fail has left you wondering whether to file online or via snail mail, Furtado says digital is still best, as long as these hiccups don’t drag on for weeks. Normally, online services are way faster (two weeks or less vs. eight weeks), far less likely to get lost, plus more and more Canadians are doing it that way (92 percent file electronically). You can even sign up for direct deposit which cuts down on your waiting time too.
Another reason to file online is to avoid late penalties and interest charges if it turns out that you owe the government money. If that’s the case and the CRA gets your tax filing after your deadline, you’ll get saddled with paying an extra five percent of your 2018 balance plus one percent of your balance owing for each full month your return is late, to a maximum of 12 months.
DIY or outsource it?
Another key thing is deciding whether to do it yourself or pay an expert to file for you.
“Depending on your comfort with taxes, it’s absolutely something you can download. There are inexpensive programs, [as well as] free services. But if it’s giving you a lot of stress or anxiety then you might want to consider paying to have help. Especially if that will give you the confidence to do it on your own in the following years,” says Furtado.
During tax time, students can use the UFile service for free using this code offered by the Canadian Federation of Students. Normally this service costs $16 and students can also use it to file for spouses, partners and dependents.
Another option is SimpleTax, which offers a free and pay-what-you-can option. TurboTax also offers a free service for basic tax returns. If your filing is more complicated (if you’re self-employed, have investment property or other types of investments), they have other options ranging from $20-$60.
If you don’t make a ton of money and DIY-ing it intimidates you, there are free CRA tax clinics offered, where experts can walk you through everything. They’re available to help people who make $30,000 or less, and you can find out the details here.
Figure out a filing system
Before logging into any of these services, Furtado says it’s important to get organized. Ideally, set up a system to help you collect tax deductible items all year round so you’re not scrounging for receipts at the last minute. She recommends keeping digital and hard copies by setting up a folder on your computer or laptop and dumping all paper receipts—like transit passes, childcare costs, tuition payments, charitable contributions, union dues—into a physical folder. At the very least, dump everything in a shoebox. It doesn’t matter what it is, as long as it’s all in one spot.
So what can you do if you haven’t kept all those receipts? After all, if you’re filing digitally, you don’t need to send any proof to the CRA anyway, and your chances of getting audited are pretty low (unless you are self-employed or happen to run a construction business). But experts across the board say it’s not worth the risk and you’re simply SOL. If you don’t have the receipts, you shouldn’t claim the expense (BTW, bank or credit card statements won’t cut it).
When you look at your income for the year, don’t forget to include everything—every freelance gig, every side hustle (that includes those weekends you rented out your place on that home-sharing platform!). “I rent my home out on Airbnb sometimes so I have to make sure that I claim the income and any eligible expenses. Make a note to keep a little extra aside to remit around tax time. One of our general rules is you should set aside 25 percent of that income for taxes,” explains Furtado.
If you haven’t done this, then you will probably have to scrounge up that money somehow. For next year though, you can be way more on the ball by accurately tracking your income and putting a quarter of what you make into an account that is just for taxes.
RRSP vs. TFSA
If you happen to have extra money to invest, then you need to think about whether you are going to do that through an RRSP or a TFSA (Registered Retirement Savings Plan vs. a Tax-Free Savings Account). Both of these let you invest (in mutual funds, stocks, bonds, etc), and can help you grow your money while sheltering it from getting taxed to the max.
According to Furtado and other personal finance experts, the right kind of vehicle depends on how much you make. A general rule of thumb is that if you’re making more than $50,000 a year, then an RRSP makes sense for you, but if you’re making less than that, your best bet is probably a TFSA.
If you don’t fully understand the difference between these two types of investments, then you’re not alone. A recent BMO survey shows that 32 percent of millennials don’t know the difference between a TFSA and an RRSP. Respondents aged 35 and under are also less likely than other demographics to have an RRSP account—56 percent of millennials don’t have one.
The deadline for contributing to your RRSP and have it included in your 2018 return has come and gone (it was March 1). If you didn’t get onboard with an RRSP or a TFSA this year (either because you didn’t have extra cash, or you just forgot about it), that just means you can invest more next year, if you want to. That’s because you can carry forward that room to invest ($6,000 a year for the TFSA, while the RRSP is based on your annual income so you can add your 2018 earnings to what you file for 2019). Furtado says contributing to your RRSP or your TFSA is something you should think about all year round.
File no matter what
You should file your income taxes even if you didn’t make any money this year because if you don’t, you might be missing out on tax credits and benefits that work out to a payout from the government—things like sales tax credits or support for child care. Plus, you could be dodging a bullet if it turns out that you owe tax (as in not enough was collected from you throughout the year). You can also carry forward tuition expenses or report income that you might want to make an RRSP contribution on in the future.
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