#1 Doing it yourself when it comes to taxes

Income Tax is a Game, and the Rules are complex. There is a lot of money at stake when it comes to tax matters. Therefore it is always a good idea to seek professional tax advice. Remember, your Tax Coach is an asset, not an expense. Saving on professional help in this case simply means stealing money from your business or your family.

#2 If you claim to be self-employed you must be able to prove it

More and more Canadians fall into this trap every year – people who get "gross" cheques from their employers declare themselves self-employed only because the boss tells them that they are. If this is the case with you, contact your Tax Coach immediately to see if you qualify. If you don’t, the consequences could be severe: the CRA will disallow all your "business" expenses, and you will have to pay EI, some extra taxes plus penalties and interest.

#3 Reporting income on Line 104

Be careful when putting any significant amount on Line 104 of your income tax return. In most cases the CRA will send you a letter asking for explanation. It is no secret that many business people try to avoid paying the CPP (and in some cases EI premiums) by entering their income on that line. Ask your accountant or Tax Coach if you can report any amount on Line 104.

#4 Tuition, education and textbook amounts

People often forget about Form T2202 which can be obtained from college/university. You need to attach this form to your paper tax return in order to be able to claim tuition and education credit. This credit is transferrable between spouses. In case of children, if a student cannot use it (his or her income is too low and will not be taxed), the credit can be transferred to a parent or grandparent up to $5,000. In this case the student should sign the reverse side of the Form (sometimes people forget to do that). Schedule 11 should be filed only with the student's income tax return, and not with the return of the individual claiming the transfer.

#5 Childcare expenses

Many new immigrants forget to pay their parents for babysitting their kids. Grandparents who are new to Canada normally have little and no income – and therefore in most cases this money will not be taxed in their hands. Also, don’t forget that child care expenses can include fees paid to gymnastics or other recreational activity for after-school classes. The primary reason for enrolling the child in the activity should be to allow a parent to perform duties of employment.

#6 Moving expenses

Expenses must be the result of moving at least 40 km closer to the new place of work than your previous home. Amounts are deductible against employment or self-employment income earned at the new location. The expenses should not exceed the taxpayer’s income from business or a job at a new location (you can deduct the unused part of those expenses from employment or self-employment income earned at the new location in the following years). You cannot deduct your moving expenses from any other type of income, such as investment income or Employment Insurance benefits, even if you receive this income at the new location. The following are some examples of costs which are not deductible as moving expenses: expenses for work done to make your old home more saleable, any loss from the sale of your old home, or expenses for house-hunting or job-hunting trips before you move.

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