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Tips for passing over the tax baton

By the time your children have become young adults, they’ve probably had at least one “real” job. They’ve applied for and received a social insurance number, they’ve earned a pay cheque and they have also received a T4 information slip from their employer. They are now ready to file their own tax return, one of the financial “rites of passage” for a young adult.

Remind them that the filing deadline is April 30 of the year following the tax year. If the return is not filed on time and tax is owing, they will be charged a late filing penalty.

Here are some tips for passing the tax baton:

• Talk to them about their civic duty, reminding them that we pay taxes because the government needs money to provide us with the programs and services we use every day.
• Explain to them that they need to file a tax return if they either owe tax or to recover any overpaid tax or other source deductions (e.g., CPP or EI) that an employer may have withheld from their pay cheque and remitted to the government.
• Filing a tax return also creates contribution room in a Registered Retirement Savings Plan (RRSP), so this is also a good time to explain a little about how RRSPs work.
• Help them set up and organize files for all of their tax receipts and documents, such as T4s for employment income, T5s for investment income, charitable donation receipts, tuition receipts and public transit passes.
• Encourage them to file these slips as they receive them and to resist the temptation to throw everything into a shoebox! Here are 6 easy steps you and your kids can take throughout the year to make tax time easier
• If they are post-secondary students, they are entitled to claim tax credits for tuition fees, the education amount and the textbook amount.
• Remind them that the filing deadline is April 30 of the year following the tax year. If the return is not filed on time and tax is owing, they will be charged a late filing penalty.
• Any tax owing is also due on April 30 and interest will be charged on unpaid amounts beginning May 1.
• Assuming their return is fairly straightforward, encourage them to prepare it using one of the online tax preparation services certified by the Canada Revenue Agency (CRA). They can then file the return with CRA using NETFILE, which is fast, easy and secure. If they are entitled to a refund, they can arrange to have it deposited directly to their bank account.

As always, if they (or you) still need help, set up a meeting with your accountant or with a local tax preparation service. It’s a great opportunity to have questions answered by a professional.