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The Importance of Filing Taxes Each Year?

The Importance of Filing Taxes Each Year?

Most people dread tax season. You might think that filing your taxes is a hassle, and it’s easy to feel overwhelmed and stressed out during this time. However, it is a necessary task that we should complete each year. 

While most of us view filing our taxes every year as an obligation or a chore, there are good reasons to file your taxes.

People should file their taxes every year, even if they don’t earn an income. It is a way to avoid any interest and penalties from the CRA. But filing your taxes on time means you can get your tax refund, access to benefits that you are eligible for, and help you show proof of income when you need it to access loans and mortgages.

Avoid Penalties 

If you do not file your taxes on time, you might owe the CRA penalties and interest charges, so it’s best to get them done as soon as possible.

Typically, your taxes are deducted at the source if you have a traditional job. Your employer has already paid taxes on your behalf when they give you your paycheck weekly or bi-weekly. 

However, if you have multiple jobs or other sources of income or if your tax situation has changed during the year, you might owe taxes.

The deadline to file taxes is April 30 of every year. If you owe taxes and cannot pay them, the CRA still wants you to file your taxes on time. Once you know what you owe, you can consult a debt consultant to explore your options to repay the amounts due to the CRA.

Get your Tax Refund 

A big reason to file taxes is that you might be entitled to a refund. The government uses your taxes to provide services and infrastructure, but you might have paid too much tax during the year. According to the CRA, the only way to claim your refund is by filing your taxes.

Getting your refund can take a while, especially around the tax deadlines. It is essential to file your taxes as soon as possible to receive your tax refund right away. 

Eligibility for Benefits and Credits

Eligibility for Benefits and Credits

Your taxes also help determine your eligibility for certain government benefits and credits. If you are eligible for any benefits or credits, it is crucial to file your taxes on time not to interrupt your benefit payments.

Many of the benefits Ontarians receive are administered by the CRA. Your income on your tax return determines your eligibility for many of the benefits or credits you receive. If the CRA does not have this information, you may not receive the benefit payments.

Some benefits that rely on your tax return include:

You might rely on many of the benefits listed above and several other benefits to manage your day-to-day living expenses in Ontario. 

However, these benefit payments rely on filing your tax return every year with the CRA. If you do not file your tax return on time, it can affect your eligibility and the timing of when you receive these payments. 

Record or Proof of Income

Your tax return is also a record of your income. When you apply for a loan or grant, the lender will ask you for proof of income. One of the most reliable ways to prove your income is through the notice of assessment provided by the CRA once you file your taxes.

There are many scenarios in which you will need to provide proof of income, such as:  

Providing proof of your income from a verified and reliable source (the CRA) can help you easily apply for many types of loans, grants, mortgages, and lines of credit when you need it. 

Self-Employed 

If you are self-employed, filing your taxes is even more critical. You also pay into programs like Employment Insurance and the Canada Pension Plan when you file your taxes.

These programs benefit those who have lost their job or cannot work due to an illness or injury. If you do not pay into these programs, you will not be eligible for their benefits.

File your taxes on time

File your taxes on time

Filing your taxes may not be your favourite item on your annual to-do list, but it is a necessary task that we must complete each year, even if you do not earn an income. If you do not file taxes on time, you might get charged penalties and interest charges, and it can interrupt any benefit payments or refunds you receive.

If you have filed your taxes and now owe money to the CRA, we can help you explore your options to repay what you owe to the CRA and eliminate income tax debt in Ontario.

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