Costly Tax Mistakes and Omissions

Making common tax mistakes and omissions can be very costly for taxpayers, sometimes resulting in the loss of thousands of dollars.

Failure to immediately address the more serious ones can often have very dire consequences. Penalties and interest on taxes owing will eat up income which might otherwise have been invested while tax free money due to unclaimed deductions or refunds is lost.

The good news is that these can be easily corrected at little or no cost to the taxpayer. You can often do most of them yourself. Your tax preparer or financial planner should also be able to assist you in resolving many of these issues.

Here is a list of some of the more frequent mistakes.

  1. Failing to file on time or not filing at all.

  2. Failing to make a contribution to their RRSP.

  3. Withdrawing funds from RRSP into taxable income.

  4. Not keeping accurate or complete records for tax purposes.

  5. Failing to take full advantage of claims relating to medical expenses.

  6. Failing to claim transferable credits or deductions when the spouse's income is lower.

  7. Failing to claim employment expenses including automobile expenses and office-in-home expenses.

  8. Forgetting to claim investment related expenses like interest on margin accounts or safety deposit boxes are often overlooked.

  9. Not carrying forward charitable donations in order to take advantage of the higher tax rate for contributions in excess of $200.

  10. Failing to claim amounts transferable from children like tuition amounts.

  11. Failing to claim all available deductions if you have a part-time business.

  12. Getting involved in tax schemes without proper information or advice.

  13. Faulty calculations

Avoiding Tax mistakes Creating Wealth

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