Expert advice to avoid tax-filing mistakes — and save you money

He often sees clients miss out on deductions that reduce their taxable income and credits that reduce their total income tax. 

For example, Heath said not all parents know what child care expenses are tax-deductible.

“There are the obvious child care expenses, like if somebody has a nanny,” says Heath, “but there are also some less obvious ones, like summer camps.”

Parents can claim between $5,000 and $11,000 per year per child for child care expenses, depending on their age and whether their child has a disability. There are limits to how much you can claim per child on certain expenses, like a boarding school stay.

Heath also said eligible Canadians will need to put in a little extra work this year into claiming work-from-home expenses. During the last few years, Canadians could claim a flat $2 amount for every day worked from home, up to an annual limit of $500. As the pandemic wanes, the CRA has reverted to the detailed method of claiming work-from-home expenses, which requires your workplace to submit Form T2200 on your behalf.

“I suppose it’s easier if you’re a renter, but if you’re a homeowner, you need to figure out your heat, water, and internet costs — and it is quite a bit of work to pull that information together,” said Heath, adding that you might need to pro-rate those costs if you only use a portion of your home as an office space, as most people do.

“For a lot of people, it may only be a modest deduction, but it’s new for a lot of people who might never have worked from home until the pandemic and haven’t needed to do this detailed method in the past.”

Tax credits for medical expenses often go under the radar. If you have a health or dental plan through work, “sometimes you pay the premium, sometimes it’s sort of a combination,” said Heath. “But if you pay the premium, those premiums are actually considered eligible medical expenses with the caveat that you have a certain threshold of medical expenses you exceed.”

For the 2023 tax year, your household’s eligible medical expenses must exceed the lesser of two amounts: three per cent of your net income or $2,635, according to the Government of Canada website. 

Chris Munn, CPA and tax partner at Toronto-based Hogg, Shain & Scheck Professional Corporation, says people often miss out on tax credits for things like the interest paid on government student loans and deductions for certain union dues or professional membership fees. 

“A big one I’ve seen missed over my years of doing taxes is the disability tax credit,” said Munn, adding that many Canadians don’t realize they meet the eligibility criteria.

Besides omitting certain tax credits and deductions, Munn says some Canadians make the costly error of not filing a return at all.

Even if you make little to no income, Munn says you need to file a return to receive certain tax-free benefits, like the Canada Carbon Rebate — previously known as the climate action incentive — and GST/HST credit.

Lastly, Munn emphasizes the importance of reporting all your income on the tax return, including the money you make from any side hustles — even if those aren’t your main sources of income.