A great source of stress is tax season. A recent survey revealed that Canadians’ top worry before filing their taxes was that they owed money. In short, when you pay more income tax than you owe, you receive a tax refund. Your total income, less any credits and deductions, multiplied by your average tax rate is how much tax you pay.
A tax refund may be due in a number of situations
You get a refund when the employer deducts an excessive amount of taxes. Your Registered Retirement Savings Plan (RRSP) receives contributions from you. Making contributions to an RRSP lowers your taxable income, which could lead to a tax return, particularly if your employer withholds taxes on your entire pay. This helps you save for retirement.
Aside from your RRSP contributions, you can also deduct other expenses like child care costs and refundable tax credits like the GST/HST credit, which can lower your tax liability and boost your return. Remember that refundable tax credits are not the same as non-refundable tax credits, which lower your tax liability to zero but do not produce a refund.
Eligibility for Government Benefits and Credits
To assist individuals and families with low or moderate incomes in paying less in GST, the GST credit is a tax-free payment that is made every three months. Other refundable tax credits are CCB and CWB. The size of your family, your income, and other variables all affect this GST benefit. After you file your same day tax refund online, the government can determine if you qualify for the credit and how much you will receive. This credit is typically granted every three months.
Avoid penalties and interest
You can be required to pay penalties and interest on any taxes you owe if you fail to file your income tax return on time. You can prevent these additional expenses if you file your taxes on time.
Record-Keeping
You preserve a record of your earnings and activities for future reference when you file your tax return. Applying for a mortgage, obtaining a loan, or applying for immigration may all require this.
Using government services
You might be required to provide documentation of your income or tax filing history in order to access certain government services and programs. You may ensure that you have the necessary documents at the appropriate time by filing your taxes.
