How do You do your Taxes?

Gone are the days where I did my taxes with pen and paper. Happily those days are over.

I use TurboTax to do my tax returns and for those of my direct family. Other software solutions work just as well, but I am comfortable with this tool, so I keep using it.

Typically I do my taxes over about a 1.5 month period. I must wait while the various tax receipts and such arrive at my house.

Typically the methodology followed would be something like:

  • Purchase TurboTax, at Costco. This is usually the cheapest place to get it.
  • Update TurboTax. The software does this automatically, but needs to be done. The updates are important.
  • Create this year’s tax returns for my family, based on last year’s TurboTax files. The software manages to bring forward a lot of useful info like personal info.
  • TurboTax allows you to import data from the CRA site. This year, it is more exciting, as I am locked out.
  • Use my last pay stub for most data needed, until my T-4 arrives.
  • Go into Quicken and glean out whatever information I think I can get, and do a rough estimate of what my taxes might be. Inevitably I overestimate how much tax I have paid and I start getting delusions of large tax refunds, but that is soon remedied.
    • TurboTax does have an import from Quicken tool. Every time I use it, it has not gone well, so I eschew this tool.
  • With this estimate I will see if there is a need to buy RRSP’s to lower tax owed, which usually is not the case
  • As each receipt and/or T-4 or such arrives I then type it into TurboTax and watch my estimate become a closer to reality number
  • Over this time I will remember things I have forgotten to input. I will add them with glee seeing my refund number inflate.
  • By the time the first week of March rolls around my return is 95% complete and factual (i.e. not based on estimates). I can then start thinking about E-Filing my return.
  • Finally the decision whether to submit my returns via E-File. This usually happens on a Sunday morning.
    • Sometimes, there are issues E-filing, so keep all receipts and take screen shots.

And Then?

With that, I await to see whether I forgot something (inevitably a receipt will appear near the end of March, which I have forgotten about), or whether I made an incorrect assumption, when the CRA sends me their response to my submission.

Addendum

This is a rewrite of an article from 2010.

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My CRA Error ERR.021

I have spoken about My CRA before, it allows access to your CRA account. The error I received (Error – ERR.021) was shocking. Updates for this can be found here.

I am now locked out from this with the following screen:

CRA Error ERR.021
Lock Out Error ERR.021 for My CRA account

The access I used was using my Banking Access (i.e. my bank card log in credentials). I have not applied for CERB (as background).

I managed to call the CRA, and was told that someone would call me back about the ERR.021 issue. This would allow me to get access to my account. I was attempting to see what my RRSP room was (as background).

Then I received the following email to the email address I have on file with the CRA.

CRA Email Deletion Message

So now, I cannot log into my CRA account, and I cannot receive emails either. I will receive something using Canada Post, explaining what is going on, and how to fix this issue.

The CBC has posted the following:

Christopher Doody, a CRA media relations representative, said in an email it was meant “as a security precaution in the context of ongoing investigative work, and is not due to a cyber security breach of CRA systems.” He said affected users can expect a letter in the mail with instructions on how to unlock their account.

CRA locks online accounts amid investigation, leaving users worried – CBC

Current Status

Still locked out of my CRA account. Conjecture is that my log in credentials were being sold on the Dark Web. (Feb 17th)

The CRA answered my tweet, with the following:

No phone call, and no letter as of yet either. The Dark Web Sale may have been of older data, however, can’t fault CRA for security. I can fault them for slow response. I have a T4 and most of my other tax forms, but I can’t actually check with CRA or submit my taxes yet. (March 1, 2020)

OH BOY! I get to call them, AGAIN!šŸ¤¦šŸ»šŸ¤¦šŸ½šŸ¤¦ā€ā™€ļø

I will have to dedicate a whole day to do this too. Yea! (March 3)

The call was made, I spent 4 minutes going through menus. They were too busy, so they hung up. šŸ¤¦šŸ»šŸ¤¦šŸ½šŸ¤¦ā€ā™€ļø (March 4)

Finally, Success!

I called on Monday at 8:05 AM (EST) (March 8), and finally got through after a short (10 minute) wait. Lots of resetting of things, but I now have access back to My CRA account .

You will need to set up:

  • A new 6 digit PIN Number for calls with CRA in the future
  • Have your 2019 return in front of you to answer questions
  • Have all of your direct deposit banking information as well
  • Your cell phone number for Multi-Level Authentication
  • An Email Address for correspondence.

(March 08)

And Now a Knuckleball

Just got the same email as before saying my account is now suspended. Problem is I can still log in using my banking credentials (for now). Also a very quizzical comment added:

If you are unable to use this online option, we ask that you please try again after March 22, 2021 and call the CRA only if the online option doesn’t work for you after this date.

CRA Email of March 13 2021

I have all the information I need, so I am OK, for now. I will check tomorrow, and see if I can log in. Come back and look for an update.

(March 13 2021)

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More RDSP Talk

A while ago I spoke with Tom Drake at Maple Money about the DTC and RDSP. After some judicious edit’ing Tom has published the Podcast here. As usual you can read about the RDSP on my Registered Disability Savings Plan page.

For those unaware there are a bunch of very smart folks that I use for research on this topic (my wife being a major contributor), and whenever I do one of these talks, I get a few things not quite right (and this is no difference). My source at ESDC (who is very patient and kind) points out a few of my fumbles: I mention that the program is 10 years old, it was started in 2008, so that is a 12 years in 2020.

RDSP and Bankruptcy

Doug Hoyes and I have discussed (on his Podcast) about the topic of RDSPs and bankruptcy, but my source now states clearly:

“The Bankruptcy Act was changed last year through the Budget Implementation Act.ā€Ž See 67(1)(b.3) of the Insolvency and Bankruptcy Act.”

ESDC Source

134 Paragraph 67(1)ā€(b.ā€3) of the Act is replaced by the following:(b.ā€3) without restricting the generality of paragraph (b), property in a registered retirement savings plan, a registered retirement income fund or a registered disability savings plan, as those expressions are defined in the Income Tax Act, or in any prescribed plan, other than property contributed to any such plan or fund in the 12 months before the date of bankruptcy,

Bill C-97

RDSP After DTC Lost

If the beneficiary loses their Disability Tax Credit (DTC), it used to be that the RDSP had to be closed. I waffled around this one with Tom, but the actual answer is:

“As of Budget day 2019, a RDSP nā€Žo longer is required to be closed due to loss of DTC. During a period when the beneficiary in not DTC eligible no contributions can be made to the plan except for the rollover of funds from a RRSP of a deceased parent or grandparent upon whom the beneficiary was dependent.  During a period of DTC eligibility, the beneficiary will not accumulate annual grant or bond entitlements. The Assistance Holdback Amount will be determined as the ten year period immediately prior to the beneficiary being DTC ineligible, and will remain that period until the end of the year the beneficiary turns 50. Each subsequent year the AHA will decrease by a year. (51-9 years, 52-8 years,… 59-1 year). The year the beneficiary turns 60, the AHA is nil. Should the benficiary requalify for the DTC, the plan will operate as normal.”

ESDC Source

So the money hangs around until the person turns 60 and then can be withdrawn, as Tom Drake pointed out should be the case.

Each time I talk about the Registered Disability Savings Plan and DTC I end up learning more myself.


EQ Bank Savings Plus Account

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My CRA Account

One of the most important things you can have is have a My CRA on-line account with the Tax Folks. When you apply for the Canada Revenue Agency log in you have access to a lot of your financial information. How do you do that?

Straight forward

Go to this web site to start the process: CRA Log In Registration Site . Note you will need a copy of last years Tax return to verify you are who you are. Once you register, you wait, because the CRA will then send via Canada Post your log in credentials.

Make sure you set up all the correct security questions when you set up your log-in. The security questions will help keep your CRA log in safe.

Yes, this is cumbersome, but also very important. This variation on 2 stage verification is important to ensure no scurrilous nasty folk get at your CRA data. Even in troubled times, security is very important.

Once this letter shows up follow the instructions and log in. After logging in once, you can then put that information somewhere very secure, and forget about it. Why? Your Bank access (i.e. sign in partners) for online banking can be used (for most of us) as our log in after that.

Why Get it?

Why is My CRA so good to have? Here are a few things you can get there:

  • Your TFSA limit for this year. This is calculated at the start of the year, so if you have already deposited money into it, you’ll have to take that into consideration.
  • Your RRSP limit for the year. See the TFSA for the same cautions about the data.
  • The Status of your Tax Return or Appeal. I have found this invaluable with my many reviews and such. Typically the CRA will tell you if you have email to deal with from them as well.
  • Emails from the CRA about your return, or appeal. This is the only way the CRA will contact you, and it will tell you to check My CRA, without any link. They won’t ask for iTunes cards either.
  • Usually you can download your Tax data into Turbotax and other Tax Prep software, which makes life infinitely easier. I used that this year, very useful.
  • Employment insurance ei benefits are also listed, if you are unemployed.
  • The Canada recovery benefit crb is also on this page.
  • Lots of other stuff too.

If you are an on-line person, get this access now, it will make your life much simpler.

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CRA and me: Assessment Excitement

The summer of 2018, the CRA sent me a letter of assessment for my son’s school fees. These kind of assessments happen often. While I am slightly freaked out by them, it is still not a big deal. The letter asked for all associated documentation supporting my medical claim for my son’s school fees.

I dutifully collected all the receipts for the School and for my son’s Occupational Therapist. I wrote a cover letter outlining what I was sending and I sent it via registered mail to the CRA.

In that previous paragraph I made two mistakes (one small and one critical error):

  1. I could have easily scanned all the receipts and submitted them to the CRA on line. Much faster, and less expensive. Hopefully I will remember that for the next time.
  2. The letter asked for all associated documentation, and I misinterpreted that to mean receipts, and that caused a big problem.

 For those unaware, if your child is disabled you can claim their schooling or training as a medical expense. You must have a DTC first, and then ask permission of the CRA to be able to make that claim on your taxes. This is where my blunder took place.

My son had changed schools a while back, and I had never done a new letter outlining how his new school would help him with his disability (Autism Spectrum). Without this letter, and supporting documentation from his Doctor and other medical professionals, the CRA had every right to deny this claim on my taxes. As I did not include any supporting documentation with my assessment, the CRA denied my claim, and sent me a bill for what I owed.

The CRA was in the right to do this, and I was in the wrong for not sending it. I want to be clear on this point, I am not casting any shade on the CRA, they have actually been very helpful in this case.

It took a while, but I finally received my Assessment response via email, and I was shocked and upset to see the results(an over $4000 tax bill). After reading the email a few times, my wife read it and pointed out my mistake. She realized that I had not sent a new package outlining how the new school helped my son. I believe I sputtered and swore, but then came to the epiphany that my wife was right.

The past few weeks I have spent collecting the needed data and letters to support my claim for my son’s school expenses, and submitted them (electronically) to the CRA.

As the date of when I was supposed to pay my new tax bill came closer, I realized my reassessment was not going to be completed in time. Again, this was due to my procrastination, not the CRA inaction. I decided to call the CRA, and they directed me to their collections group.

When I spoke to the collections person, he brought up my file, I explained that I had submitted the needed documentation, and they decided to give me a 90-day extension on my due payment. This means I won’t have to fork out $4000 at Christmas time.

There is no guarantee that the CRA will accept my claim and documentation. Given the amount of supporting documentation I am hopeful that this is sufficient, but at least I won’t have to pay out a large sum of money now (that might be refunded later).

Conclusion

As I have said previously, if you don’t ask the answer is always no. I asked the CRA for clarification on what they needed, they provided that to me. The CRA also granted me an extension on payment, because I asked, and had a good set of reasons.

Sometimes the CRA screws up, but in this case, they are actually the heroes in this story (so far).

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