Well, February has passed and you should have all the documents you need to get your taxes prepared. Whether you do your taxes yourself or you have someone else do them, just getting your documents ready can be a stressful time. Taxes are something that you should be thinking of throughout the year but unless you are running your own small business I’ll bet tax time is the only time you think of them.
How long do I keep my tax records?
Keep your tax records & supporting documents for six full years.
Even if you do not have to attach certain supporting documents to your return, or if you are filing your return electronically, keep them in case your return is selected for review or audit. Revenue Canada may request documents other than official receipts as proof of any deduction or credit you claim, such as cancelled cheques or bank statements.
This six-year period starts at the end of the tax year for which you are filing. So, if you are filing your 2017 taxes shortly you will need to keep files from 2017 back to 2012.
What do I do with older records?
Ensure that they are properly disposed of by shredding them! Do not leave anything to chance. If you don’t own a shredder most office supply stores will provide a shredding service for a nominal fee. I recently stopped into my local office supply store and had a box of documents shredded for just a few dollars.
Notice of assessment
You will receive a notice of assessment from Revenue Canada once your taxes have been filed and reviewed. It will confirm that your return was assessed and whether you owe taxes, whether a refund is owed to you or if there is a zero balance. If there are no discrepancies between your filing and this notice, then file it away with the taxation year that it applies to. You will need it for your next tax year when you file.
Filing throughout the year
Throughout the year you are going to accumulate receipts for many different items that you may or may not require for tax purposes depending on your individual circumstances. Open a file and label it according to the current tax year. Papers and receipts you need for taxes should be placed in this file. This current year folder will make it a lot easier to keep track of important documents you get throughout the year, like donation receipts, etc. All the papers you need to prepare your taxes will all be in one place.
You can even go one step further, especially if running a small business, and separate your tax receipts into categories like health expenses, business expenses, car expenses, office supplies, etc. to be even better organized for the upcoming tax year. You may want to separate your paperwork this way anyway if you want to track the cost of running your household on an annual basis.
Tax time can be pretty stressful but if you plan ahead and have an accessible file with everything you need, things will go a lot smoother. ClutterBGone loves organizing paperwork. It’s not too late. Tax time is here, are you ready?