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Are your financial records a mess? Here's how to dig out

Tax time can be overwhelming, especially if your efforts to organize are starting from scratch. Experts suggest setting aside a few hours to go through your papers. 'Take a deep breath, relax, make sure you have cold water on the desk.'


There's nothing like tax season to make you realize how disorganized you really are.

Most of us are content to let our financial organization slide from time to time: a pile of household bills amassed on a little-used section of the kitchen counter, a wallet overflowing with receipts, a bundle of statements littering a dusty corner of the desk. But then April rolls around and living in "comfortable clutter" just isn't going to cut it any more.

Few of us enjoy filing income taxes, but getting organized before you file can make it less painful. Here is some advice from tax organization experts:

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1) Set aside time

Karen Bryer, a Toronto-based personal organizer, acknowledges that this time of year can be overwhelming, especially if your tax organization is starting from scratch. Ms. Bryer advocates setting aside a few hours to sit down and go through your papers.

"Take a deep breath, relax, make sure you have cold water on the desk," she said. "Assemble all of your information, open up any unopened envelopes, sort all your bits of paper into categories – T-slips here, medical expenses there, donations there."

It's important to devote yourself fully to the task, Ms. Bryer says.

"Pick a time without interruptions, when the kids are in bed or in hockey school or something," she said. "Distraction is going to screw you up and increase your frustration level."

2) Use a file folder

Next, set up a filing system. Pick up an accordion-style file folder and label the individual slots as they apply to you – bank account, job, phone bill, medical, childcare, etc. Then tuck each document into its appropriate slot. (If you do this on a regular basis throughout the year, Ms. Bryer adds, you'll avoid the last-minute paper storm at tax time.)

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If some of your tax information comes electronically, be sure to keep everything in one spot on your computer, says Eric Matthews, a bookkeeper based in Lethbridge, Alta.

"Keep everything as PDFs in a folder on your computer somewhere," he said. "Don't have some stuff in e-mail, some stuff scanned in a folder in your computer – if for some reason later on you get a call [from the Canada Revenue Agency] if it takes you a long time to track down this stuff, and that's frustrating for them and for you."

3) Make a checklist

Next, figure out whether you have everything you need to file your taxes. To pinpoint what's missing, make a checklist.

If you have an employer, says Peter Fagan, a Toronto bookkeeper, your main requirements are quite straightforward.

"No. 1, get your T-4. No. 2, any RRSP slips, No. 3, if you have any investment income, any T-3, T-5 and trading summary," he said. Beyond that, it depends on the individual, Mr. Fagan says. Donation receipts, childcare expenses, medical expenses – include them on your checklist if they apply to you.

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It's useful to look at last year's tax return, adds Gary Booth, a Toronto accountant.

"The types of income and related deductions are consistent from one tax year to the next tax year, so it is very advantageous to review last year's documentation to ensure the various T-slips or other documentation are also included on this year's return," Mr. Booth says. "If we have any missing documentation, we can request a copy from the issuer."

Mr. Booth advises to evaluate this year for any personal or financial changes, such as the birth of a child or new investments. As well, examine the booklet issued by the Canada Revenue Agency each year on how to file your tax return. It outlines any tax rules that may have changed – there's about 50 this year, according to Mr. Booth.

When it comes to investment income, it's important to talk to your investment adviser to determine whether you have all the slips you need, says Christie Henderson, an Oakville, Ont., accountant.

"Maybe you should have five [T-3s or T-5s]and you get three in the mail," she said. "You're trying to help your accountant out and you give them what you have, and then in July or August when the CRA does their slip-matching, you get a nasty surprise in the mail saying you've missed this one and this one."

You may need to chase down receipts when it comes to childcare deductions and child activity credits, Ms. Henderson says, because many places don't send them in the mail.

When it comes to medical expenses, Mr. Fagan says many clients assume they have to miss out on deductions because they can't find an errant receipt. However, he says pharmacists, chiropractors, massage therapists and other medical practitioners will print out a yearly summary.

4) Self-employed? Document those expenses carefully

It's easy to get bogged down in paperwork when you own your own business. If you are self-employed, be sure to give yourself plenty of time to get organized and avoid missing out on deductions.

"I'd always recommend using something like Quicken or even an Excel spreadsheet to keep track of the different categories of expenses that you have," Ms. Henderson says.

It's worthwhile getting into the habit of writing the particulars of each expense on the back of each receipt, she added.

"When we have clients in and we're helping them through an audit, if you're really organized and everything's really well documented, [the CRA is]going to look at it and go away," she said. "It's the people who are super disorganized and can't even find their stuff, the [CRA]is going to know it's worth their while to spend a lot of time looking at their file."

5) Do a dry run

If you're doing your taxes yourself, Mr. Matthews advises that you go through a "dry run" in advance of the due date, to ensure you haven't forgotten anything.

"If you're using TurboTax or something like that, you can do a dry run through the app, or through the paper return," he said. "Fill in the [information]you do have, and then make notes as you're going through, like, 'Where are my RRSP forms?' The software is really good for that."

Just be sure to give yourself enough time to retrieve missing documents, Mr. Matthews says.

"If you do it at last minute, then you're in panic mode and you'll say, 'I'll just skip it, I won't claim those deductions this year,' and you could be costing yourself some money that way."

6) File early

There are benefits to filing early, not the least of which is money back sooner.

"If you're getting a large refund, you'll be very likely to get your refund back quickly, but if you wait until the last two weeks, just the sheer volume will mean that it takes longer," Ms. Henderson said.

As well, if you are getting someone to do your taxes for you, it's a good idea to get them while they are fresh, Ms. Henderson said.

"If you're bringing something to them at 8 p.m. on April 29, they're feeling a little run down and exhausted and there might be a couple of deductions that if they were a little sharper and a little less harried, they might have asked you about," she said.

7) Put your tax refund to good use

"Your tax refund is found money. If you had to get a RRSP loan to get an RRSP, you have to pay that down. Next, take a credit card and you feed it," Mr. Fagan advises.

Mr. Matthews suggests that because taxes are top of mind, you could look at the things you didn't take advantage of this year and use your refund for that.

"Look at your RRSP limit – it's going to be an investment in your future and will also help you out with your taxes next year," he said. If you are self-employed, invest in your business, instead of your vacation plans.

"Maybe instead of going away for the weekend and blowing it all, put the refund into new equipment or advertising, that will then turn into more money anyway," he said.

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About the Author

Shelley White is a freelance writer, editor, video producer and mother of twins. Before taking the plunge into the wild world of freelance work, she produced educational programming at TVO, explored digital culture at the late lamented Shift magazine and entertained young minds at MuchMusic. More

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