Taxes Completed, Hurray!

[Thorin]

Strangely enough (given the amount of time I spend reading tax laws), for the last few years I've been waiting until the last minute with figuring out my taxes.  Mind you, I normally end up owing money as I request less deductions from my paycheques because of the fam-damily giving me a swackload of tax credits.  These deductions then get reduced when my wife makes money.

So this year I waited until the last couple of days again, forgetting that this year my wife went to school instead of working and we ended up with money coming back instead of money owing.  Jeebus, I could've done them early and had $128 in the bank.  Well, actually, not in the bank but used to pay for some sort of sport.

I hope I'm the last one in our group to get the taxes done, as they're due Monday at midnight

Remember that the _most_ important thing is for them to have all their money.  So if you've worked out how much you owe but can't mail the paperwork Monday, at least make your payment at a bank or through your online banking.  Their penalties are a percentage of the unpaid amount after April 30, and if you have no unpaid amount then the penalty is $0

[Melbosa]

Have to do mine tomorrow night... mine and my wife's, so no you are not last

[Tom]

Hm, I guess I should file mine today then

[Thorin]

lol

And I thought I was bad for leaving it so late...

[Lazybones]

Could be worse, you could be several years behind...

I have already received this years return...

[Mr. Analog]

My accountant submitted mine last week, I'm hoping I get my return soon

[Thorin]

My accountant submitted mine last week, I'm hoping I get my return soon

I learned about a week ago that when my dad was 14, his mom and dad split up and they had to split the store they had started together and when doing so, the bookkeeper they had been using emptied the bank account and disappeared.  Finally I understood his paranoia about accountants.  Because of this paranoia, he did his own taxes and I in turn got told to do my own taxes.  Now I'm not paranoid about an accountant taking off with my money, but due to his paranoia I learned doing taxes isn't that hard (even if you're self-employed), and so I do them myself to save money.  Of course, this does involve keeping up with changes to the tax code.

Did you know that we're paying more tax now than last year?  The tax brackets and non-refundable tax credits are all indexed to inflation, and the federal government pegged last year's inflation at 2.8% so that's what the tax brackets and non-refundable tax credits increased by.

However, EI had a 3.85% increase in its cap and went from 1.78% to 1.83% of your income, for a total 6.76% increase in how much EI they take from you over last year ($53.21 more than last year if you max it out).  Raw math: last year cap $44,200, this year cap $45,900, last year rate 1.78%, this year rate 1.83%, last year max $786.76, this year max $839.97.

Meanwhile CPP had a 3.73% increase in its cap, good for 4.02% increase in how much CPP they take from you over last year ($89.10 more than last year if you max it out).  Raw math: last year floor $3,500, this year floor $3,500, last year cap $48,300, this year cap $50,100, last year rate 4.95%, this year rate 4.95%.

So remember that when the government of the day tries to say, "We've lowered taxes" - they haven't said this so far this year, although Budget 2012 alludes to it in several places by saying "keeping taxes lower".  The actual numbers say it just ain't so.  Of course we're only talking about $142.31 more per year, but imagine if they do that every year.

[Mr. Analog]

Well that sure sucked for your grandparents, you always think you can trust your employees, particularly your bookkeeper!

Anyway, I go through an accountant because doing taxes and finding out what programs or benefits you are entitled to when you are legally blind is particularly annoying to keep up with (it frequently changes in this country...)

I've been doing business with my accountant for 10+ years and it's been a long time since I got less than $1500 back, so I don't feel so bad about spending the money to make life easier for me

[Lazybones]

Well I used an account to do my taxes for the last few years due to moving between provinces, home sales, renting out a house and then late filling a few years in between.

- As far as taxes go the only thing I see going wrong is not getting a good return, I don't have the account handling any thing other than my taxes.
- The account can expedite some information gathering for prior years over you requesting it your self if you are missing some documents.
- The account is written in to the responsibility of the return with you, so if they screw up it isn't all on you, unless YOU lied to them.

As it turns out the accounts knowledge and interpretation of things such as capital gains (you can defer which residence is your primary for a few years) was far better than my own even after reading the information present, instead of owing money on my property I had been renting out after moving out, it turned out I was getting money back after review of the closing fees etc... It turned out to be one of my biggest returns yet.

If my job, and home and kids all stay constant over the year, I probably will just file using software, however when larger life changes happen it is nice to have someone with experience review everything.

[Thorin]

I totally hear ya, Mr. A., if I wasn't actually interested in the tidbits of tax law I'd probably have someone else do it for me too.  It is a fair bit of reading, especially the federal and provincial budget documents when they come out.

Lazy, glad you got a big return.  I didn't know you could defer changing your primary residence, I thought when the last family member moves out and into a new place that is the legislated change of primary residence?  Maybe it's because you were renting the new place, so you did not have a new primary residence for capital-gains-exemption's sake.  Moving expenses to go from where you were to where you are can certainly add up, though, and those can really reduce the taxes owing.

I've pre-planned my taxes for next year already, so if nothing changes I know I'm getting $1,244.92 back.  If nothing changes.  Likely changes:
- wife starts working and making money when her schooling's done
- kids do more sports (although only the youngest will have an effect as only the youngest hasn't been enrolled up to the maximum credit in sports already this year)
- kids take some kind of arts or culture programs (including web design!)
- company is profitable and pays bonus
- I start doing some freelance work on the side (self-employment would make taxes interesting again!)
- I find some extra cash somewhere and buy RRSPs with it

[Melbosa]

- I find some extra cash somewhere and buy RRSPs with it

If you figure out the finding extra cash part share... who wouldn't want to find extra cash ...

[Thorin]

- I find some extra cash somewhere and buy RRSPs with it

If you figure out the finding extra cash part share... who wouldn't want to find extra cash ...

It usually involves old relatives either passing along extra money before passing, or passing before passing along extra money.

Hah, have fun dissecting that sentence   Buffalo buffalo buffalo Buffalo buffalo buffalo Buffalo buffalo.

Or it could involve not having to pay as much for sports team fees due to sponsorship.

Or right now I have $1,800 planned to be paid in taxes next year and have been working towards saving that up, but that math was predicated on my wife working all of this year, and so far she won't have worked at least half the year so I'll owe less, so there might be some extra cash.

[Lazybones]

I didn't know you could defer changing your primary residence, I thought when the last family member moves out and into a new place that is the legislated change of primary residence?  Maybe it's because you were renting the new place, so you did not have a new primary residence for capital-gains-exemption's sake.  Moving expenses to go from where you were to where you are can certainly add up, though, and those can really reduce the taxes owing.

Actually it is the other way around, it is because I was renting the OLD house out before selling it, you have up to 4 years to declare it no longer your primary residence. Also if you moved a long distance for work the rule can apply for more than 4 years. It took me quite a while to find this again on the website and again is a reason I don't do my own taxes completely by hand... As when I did the original estimate My self I had calculated owing about 1000 instead of getting money back on that year, it is kind of a big thing to miss.


http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html#P4266_152355

Special situations

In certain situations, the rules stated above for changes in use do not apply. The following are some of the more common situations.

Changing all your principal residence to a rental or business property

When you change your principal residence to a rental or business property, you can make an election not to be considered as having started to use your principal residence as a rental or business property. This means you do not have to report any capital gain when you change its use. If you make this election:

    you have to report the net rental or business income you earn; and
    you cannot claim capital cost allowance (CCA) on the property.

While your election is in effect, you can designate the property as your principal residence for up to four years, even if you do not use your property as your principal residence. However, you can only do this if you do not designate any other property as your principal residence for this time.

You can extend the four-year limit indefinitely if all of the following conditions are met:

    You live away from your principal residence because your employer, or your spouse's or common-law partner's employer wants you to relocate.
    You and your spouse or common-law partner are not related to the employer.
    You return to your original home while you or your spouse or common-law partner are still with the same employer, or before the end of the year following the year in which this employment ends, or you die during the term of employment.
    Your original home is at least 40 kilometres (by the shortest public route) farther than your temporary residence from your, or your spouse's or common-law partner's, new place of employment.

If you make this election, there is no immediate effect on your income tax situation when you move back into your residence. However, if you change the use of the property again and do not make this election again, any gain you have from selling the property may be subject to tax.

[Thorin]

That's the same, isn't it?  I  said, "you did not have a new primary residence for capital-gains-exemption's sake", and your quote from the website says, "you can only do this if you do not designate any other property as your principal residence for this time".

Obviously if you buy a new house you'll want to name it your principal residence, otherwise you'll have to pay capital gains on _it_, although depending on the market for the first couple of years that might be negligible (or even give you a capital loss to write off).

Here's one I don't know, though: is property tax a deductible expense on a rental property?  I mean, when you're renting out a property you're essentially running a business, and when you're running a business you can write off all kinds of expenses...

[Lazybones]

When you are renting your house out there are things you can deduct.

For example for the moths it is vacant between rental you can claim the utilities, you can also claim the additional insurance.

You can't claim standard maintenance ( wind damage to shinles) from what I recall however you can claim maintenance from damage from the renters. Again I don't have the exact details on hand.