# Filing taxes early?



## james4beach (Nov 15, 2012)

My situation is that I have a generic personal tax return (T1 general, no self-employment, no spouse). The amounts are significant, with over 100K income. Due to some upcoming travel, it will be very difficult for me to do my usual tax filing between March 1 and May 1 as I won't have access to all my files, and phone & internet access will be spotty (I may have none). Plus I won't be able to see the slips that arrive by postal mail.

I would happily file today, but most of the slips I need (T4 from employer, bank and broker T3, T5 etc) won't be available until March. So if I file early, before the travel, I would have to make some estimates: I would be guesstimating all the T-slips.

My question is, would it be a bad idea to file early and use estimates for the T-slips? I would obviously try to be on the conservative side and make sure I over-pay. The problem with estimation is that I would later (after April) have to file amendments, and I haven't done that before. Does that get messy?

Have any of you done something like this before?


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## Eclectic12 (Oct 20, 2010)

I've only ever had to modify two or three things. 
I filled out the form to identify the line numbers to change from what number to what number and mailed it off.

The only part I found hard is that the revised NOA provides what CRA thinks you need. So if the adjusted numbers aren't what one expects, it's not the easiest to track down without a phone call.


Cheers


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## MoneyGal (Apr 24, 2009)

I wouldn't do it. You're talking about filing a return for which every slip is likely to be wrong. It will take a while to get it all sorted out.

Although adjusting a return is not difficult (use the T1ADJ form) http://www.cra-arc.gc.ca/E/pbg/tf/t1-adj/t1-adj-12e.pdf -- filing a return which does not match your slips will raise a red flag for CRA, meaning you are at greater risk of an audit for that year and every subsequent year. 

And while audits and reviews, too, are not that big of a deal if you have no intent to fudge your return, why invite the trouble?


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## james4beach (Nov 15, 2012)

I agree that non-matching slips are trouble, I thought the CRA doesn't check the slips at time of filing but rather a few months later. Maybe I assumed too much, but I thought if I estimate now and file the adjustment soon enough (e.g. May) then there won't even be a discrepancy when the CRA verifies the exact slips. Do you know if that's the case?


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## MoneyGal (Apr 24, 2009)

If you file when you are expecting to file, and especially if you file electronically, they will review your return quickly -- within a few weeks, not a few months. I'm not actually sure what happens when you file an adjustment if your return has not yet been assessed; they need to pull your return in any case. 

However, filing an adjustment does draw attention to your return. It reminds me of the advice I got from my Young Drivers of Canada instructor many (MANY) years ago: if you're going to park illegally, even "just for a minute," don't put your flashers on, "because you're just screaming to the parking people, 'come and ticket me! I'm breaking the rules!'"


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## Eclectic12 (Oct 20, 2010)

I guess the other question is when is the trip done and when is the tax return due?

If it's that generic a return (i.e. no complex tax shelters or strange situations), the deadline for tax year 2012 is April 30th, 2013. 
Will the OP be back for enough time to get the return done?


Cheers


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## MoneyGal (Apr 24, 2009)

If he does not OWE any tax, there is no practical consequence to filing late. 

If he thinks he does owe tax, he can make a payment without filing his taxes.


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## james4beach (Nov 15, 2012)

MoneyGal said:


> If he does not OWE any tax, there is no practical consequence to filing late.
> 
> If he thinks he does owe tax, he can make a payment without filing his taxes.


OK then I think the first thing I will do is fire up FutureTax and put in the best figures I have, to see if I'm in a situation where I may have taxes owing. I suspect (based on last year) that I will not have taxes owing beyond what I already paid through payroll deductions.

The earliest I could actually sit down and do a proper, 100% accurate tax filing is in May.

MoneyGal: you wrote "he can make a payment without filing his taxes". That's interesting and didn't occur to me. Let's say I run the numbers now (without all slips) and it looks close, like I may potentially owe a bit. Could I just send CRA $500 to be safe, and then in May actually file my electronic tax return?

Does sending them money before the deadline - without filing a return - keep me out of trouble? Once I file it in May the full numbers will be known, and I will have likely overpaid. Will I then get a refund for whatever balance I overpaid?


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## MoneyGal (Apr 24, 2009)

Yes, it keeps you out of trouble. In theory there is a late-filing penalty, but if you have a balance on file with CRA you will not be charged the penalty. 

How to make a payment to CRA (whether filing a return or not): set up CRA as a payer on your bank account (your account number is your SIN), then make the payment electronically. CRA will refund any extra payment when your return is assessed -- and if you are set up for electronic deposit with them, the funds will just go back into your account automatically.


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## james4beach (Nov 15, 2012)

I see! The late filing penalty they describe applies only if you file past the deadline and owe tax. So if I pay early, an amount that's enough to ensure that I don't owe any tax, then when I do make a "late" filing there would be no penalty because I don't owe anything more.

That seems very easy... and no adjustments needed. I like it. So what's the downside here? I suppose for one, that I'm sending them excess money for peace of mind, and secondly running the risk that I miscalculate and still under-pay. Does that pretty much sum up the downsides?


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## MoneyGal (Apr 24, 2009)

The only other downside is that you're making an interest-free loan to the feds if you overpay (you essentially covered that in downside no. 1, though).


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## james4beach (Nov 15, 2012)

I talked with an CRA agent today regarding this strategy (pay early before filing taxes). They told me that a payment such as this would be an 'installment' and reminded me that the payment must be associated with the correct account, i.e. "2012 installment" (as opposed to 2013).

They said that sending in a cheque is the safest way to do this, as this way it can be marked as a 2012 installment. Then when I file taxes later, I would enter this amount on line 476 to reflect taxes already paid.

Does this sound right, MoneyGal? The CRA agents usually give correct information but not always...


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## MoneyGal (Apr 24, 2009)

Sounds good. I know my bank (actually credit union) lets me classify a payment to CRA as 2012 installment, 2013 installment, and I think there are actually additional categories. CRA will apply it to 2013 if you don't specifically mark it as 2012 and a cheque seems like a good way to do that.


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## kcowan (Jul 1, 2010)

In addition to thoise 2 accounts, there is the 2012 balance owing account. In years past, the CRA has screwed up these electronic payments but seems to get it right lately. So the sending of a cheque is no longer necessary.


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## james4beach (Nov 15, 2012)

Thanks everyone. I'll check online banking again, but the first bank I tried it at didn't show 2012 installment anymore.


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## MoneyGal (Apr 24, 2009)

Keith (above) is right - it should be 2012 balance owing.


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## TaxGuy (Apr 7, 2009)

You could use an accountant to have the amount due estimated and ten make an instalment. 

You can the authorize to file for you. You will either have to arrange the ya slips to be delivered to the firm or give them access to your CRA account. 

If your tax situation is simple is wouldn't cost much at all. 



james4beach said:


> My situation is that I have a generic personal tax return (T1 general, no self-employment, no spouse). The amounts are significant, with over 100K income. Due to some upcoming travel, it will be very difficult for me to do my usual tax filing between March 1 and May 1 as I won't have access to all my files, and phone & internet access will be spotty (I may have none). Plus I won't be able to see the slips that arrive by postal mail.
> 
> I would happily file today, but most of the slips I need (T4 from employer, bank and broker T3, T5 etc) won't be available until March. So if I file early, before the travel, I would have to make some estimates: I would be guesstimating all the T-slips.
> 
> ...


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## james4beach (Nov 15, 2012)

I thought the problem with 2012 balance owing is that has to be accompanied by a filed return (?). I would be sending money before the tax filing, so I thought 2012 installment is more suitable. When I finally do make the tax filing there's a line for installments already paid and that seemed like a clean process.

I guess I just don't know what happens if I send money into "2012 balance owing" today, without filing a return. When I do submit my return, the resulting net payment/refund on there won't match the balance owing payment, so would that confuse them?


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## MoneyGal (Apr 24, 2009)

I find this last post kind of funny - do you think CRA would find a single mislabelled payment *more* confusing than a return for which every numeric entry is approximate? 

Anyhoo, "2012 balance owing" is the correct account. You aren't an installment filer for 2012 and in any case all 2012 payments were all supposed to have been paid by now. 

The process would be as outlined in my first post - if you submit an amount for your 2012 balance owing, it will be adjusted when you file your actual return, either by issuing you a refund or sending you a balance due notice. If you think about it, that's what already happens for every taxpayer who has tax withheld at source: the refunds are refunded from their account on deposit, and balances due are added to that account.


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