How to Handle Your Tax Return When You’ve Made a Mistake

Understand the Types of Mistakes You Can Make

The first step in fixing your tax return is understanding the types of mistakes that can happen. Some common errors include:

Forgetting Deductions or Credits: It’s easy to overlook eligible deductions or credits like student loan interest, charitable donations, or business-related expenses. Missing these can leave you paying more tax than necessary.

Claiming Ineligible Expenses: Many taxpayers accidentally claim expenses they are not entitled to, such as moving costs that don’t meet the eligibility criteria or claiming the wrong type of tax credits.

Misreporting Marital Status: If you’re married or living in a common-law relationship, you need to report your status correctly. Misreporting this can affect benefits like the Canada Child Benefit or GST/HST credits.

Incorrect Income Reporting: If you’ve forgotten to include some income or have entered it incorrectly, it could lead to a higher tax liability or an audit.

These mistakes are common, but they can often be corrected without severe consequences if you act quickly.

How to Correct Mistakes After Filing

If you’ve realized that you made a mistake after submitting your tax return, don’t panic. There are ways to correct it.

File an Adjustment Request

Once you’ve received your Notice of Assessment from the Canada Revenue Agency (CRA), you can request a change to your return. Here’s how to proceed:

Log into your CRA My Account: If you filed your taxes online, you can use the “Change My Return” feature to make adjustments. This is a quick and easy way to correct errors without having to file a new return.

Complete a T1-Adjustment Request: If you filed a paper return, you’ll need to complete the T1-Adjustment Request form and mail it to the CRA with your supporting documents.

Wait for the CRA's Response: Once the CRA processes your adjustment request, you’ll receive a Notice of Reassessment if your change is approved. If it’s rejected, you’ll get an explanation, and you can choose to file an objection if necessary.

Use the Voluntary Disclosure Program (VDP)

If you’ve missed reporting income or need to correct a major error, you may be eligible for the CRA’s Voluntary Disclosure Program (VDP). This allows you to make changes to your return without facing penalties, as long as:

You haven’t already been contacted by the CRA about your mistake.

Your disclosure is complete and includes all the necessary information.

The information is over a year old.

The VDP can help you avoid severe penalties, so it’s worth considering if you’ve made a significant error in your filing.

The Consequences of Leaving Mistakes Uncorrected

Ignoring mistakes on your tax return can lead to some serious consequences:

Penalties and Interest: If you owe more taxes due to an error, the CRA will charge you interest on the unpaid amount. This interest can add up quickly, increasing your overall tax burden.

Delays in Refunds or Benefits: If you’ve underreported your income or claimed incorrect deductions, it could delay your refund or cause your benefits (like the Canada Child Benefit) to be recalculated or suspended.

Risk of Audit: Consistently making mistakes on your tax return can raise red flags with the CRA and potentially trigger an audit.

It’s important to address mistakes as soon as possible to avoid these penalties and complications.

Seek Professional Help from a Tax Advisor in Milton

If you’re unsure how to fix a mistake or need help navigating the process, it’s a good idea to consult a Tax Advisor in Milton. A tax professional can help you:

Identify and correct errors: They’ll review your tax return and help you identify areas that may need adjustment.

Navigate the CRA's procedures: A tax advisor can guide you through the process of filing an adjustment request or using the VDP, ensuring everything is done correctly.

Ensure compliance: They’ll help you stay compliant with the CRA’s rules and avoid mistakes in the future.

Working with a Tax Advisor in Milton can also improve your overall tax planning for the future, helping you reduce the risk of errors and make the most of available tax credits and deductions.

Prevent Future Mistakes

Once you’ve corrected any errors, take steps to avoid them in the future. Here are a few tips:

Stay organized: Keep track of all your income, expenses, and receipts throughout the year to make tax filing easier.

Double-check your return: Before submitting, carefully review all the entries on your tax return, especially income and deductions.

Use reliable tax software: Good tax software can help identify mistakes before you submit your return. If you’re unsure, don’t hesitate to seek advice from a professional.

Final Words

Mistakes on your tax return are not uncommon, but they don’t have to lead to big problems. If you’ve made an error, the key is to address it quickly by filing an adjustment request or using the CRA’s Voluntary Disclosure Program. Consulting a Tax Advisor in Milton can ensure the process goes smoothly, and they can help you minimize penalties while improving your tax planning for future filings. Don’t ignore tax mistakes—fix them as soon as possible to avoid unnecessary stress and financial penalties.