5 Tips to Millennials Filing Taxes

Benjamin Franklin accurately announced that “In this world nothing can be said to be certain, except death and taxes.” 

And believe it or not, it’s that time of the year that everyone dreads. Still here are five tips to make filing your taxes quick, simple and efficient!

1) Do your taxes and do them on time

Everyone from students to the unemployed should file their taxes because even if you are earning little to no money filing your return has benefits. Every year that you file taxes you are building contribution room for tax shelters such as a Registered Retirement Savings Plan (RRSP). In this case, filing earlier will allow you to make larger RRSP deposits when you do start earning more money. Moreover, if you do not file taxes you do not qualify for credits which entitle you to money regardless of whether you pay taxes.

2) File electronically

From authorized government software to free tax preparation apps and free tax software, electronic tax filing is the best way to go. Most people have generally simple returns and with all pertinent documents in one place it is child’s play to complete taxes quickly and efficiently. Without having to read one bit of the tax code, the software allows you to get the highest refund by answering a questionnaire which takes into consideration all of the most recent tax credits and deductions.

3) Don’t forget to apply for benefits and credits

If not filing electronically or through a tax preparation service, familiarize yourself with the latest benefits and credits to maximize your return. Tax laws vary between state and national lines however; most places have special provisions for students, low-income individuals, parents and a slew of extras such as credits for first-time homebuyers, registered education and retirement savings plans as well as fitness, medical, transit and charitable expenses.

4) Don’t celebrate a tax refund

Some people may feel that having extra taxes deducted through their payroll is a mechanism of forced savings. Others face anxiety over the prospect of having to dole out a large lump sum at the end of the year in owed taxes. However, a tax refund means that you are essentially providing the government with an interest free loan. The problem with this mechanism of saving is that you lose the flexibility of accessing your money until the taxman decides to provide you with a refund. Instead try creating your own savings plan by having money transferred from your chequinq account to your savings account on days that you get paid. Once this plan is in place, try reducing the amount of taxes deducted at source through your employer and enjoy the extra interest you accumulate.

 

5) Don’t get instant tax refunds

If you are entitled to a tax refund beware of tax preparation services who often entice customers with instant cash back. In Canada, over 1 million tax payers took the deal last year. Although it may seem tempting not to wait weeks for your hard-earned money to arrive via snail mail, instant refunds come at a high cost. Instead if you are short on money or environmentally conscious, set up direct deposit. The money is safely and securely deposited directly into your bank account, free of charge, usually within 7-15 days.

Photo Credit: Soukup