Every year Canada Revenue Agency (CRA) must address the mistakes and mistakes of individual applications. The tax system is so complex that some things must go through the cracks.
However, last year’s health and economic crisis can make filing for 2020 very complex. Millions of Canadians have seen their lifestyles somehow disrupted, and their financial situation may have changed dramatically over the last 12 months. Meanwhile, the CRA has introduced new rules, benefits, and deductions to support the economy.
With all that in mind, there is more room for error than ever before. The top two income tax mistakes Canadians can make this year are:
Not claiming all sources of income
Under normal circumstances, income comes from a limited number of sources. Generally, you need to declare the money from employment, self-employment, dividends, interest, and capital valuation separately. You may also need to file a benefit and pay taxes this year.
CRA’s Canada Emergency Response Benefit (CERB), Canada Recovery Allowance (CRB), and other COVID-related allowances are taxable. This means that you have to set aside some money in order to pay a portion of the benefit and declare this amount on your tax return.
Overlooking taxable income benefits can be one of the most common mistakes taxpayers make this year.
Missing CRA deduction
Since millions of Canadians are working from home for the first time, CRA has introduced a home office deduction. This deduction usually applies to self-employed or remote workers under special circumstances. This year, it may apply to everyone.
You may need to ask your employer to sign a form and explain the costs of all your homes. In total, this deduction can be up to $ 400. Missing it may be a common mistake in this year’s filing season.
Tax cuts and investment deductions
By filing taxes efficiently, you can reduce fines and maximize deductions. Simply put, it leaves you more cash for savings and investments. One of the top picks of my investment since 2021 is the utility giant Fortis (TSX: FTS)(NYSE: FTS)..
What I like about Fortis is how stable and predictable it is. It’s an absolutely essential service provider. People pay for utilities even during a crisis or a market crash. In addition, about two-thirds of Fortis’ cash flow is bound by long-term corporate and government contracts. Only the rest are houses.
Simply put, Fortis can predict cash flow a few years ago. This gives you the confidence to allocate dividends. In fact, the company has increased its dividend every year for the past 46 years. It is promised to raise dividends until at least 2023.
Currently trading at $ 51.7, the stock offers a favorable dividend yield of 3.9%. If you can afford the CRA, consider investing here.
Canadian tax filers can make many mistakes this year. The CRA has developed benefits and new deductions, which can be complicated to declare in tax returns. But if you do it right, you can save money on investing in dividend stocks like Fortis.
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Stupid contributor Vishesh Raisinghani There are no positions in any of the listed stocks. Motley Fool recommends FORTIS INC.
CRA: Two new tax mistakes investors can make in 2021
https://www.fool.ca/2021/01/29/cra-2-new-tax-mistakes-investors-could-make-in-2021/ CRA: Two new tax mistakes investors can make in 2021