# Help! I'm lost



## Darren (Mar 15, 2015)

Hi all. I am in the process of filing my income tax forms for the last 7 ( gulp ) years. I am on LTD . I have taken my information papers to a professional tax service , but I have quite a few concerns and questions that this service could not answer.i think I may be being over taxed by a large amount.
My question is this : will CRA help me to sort my paperwork troubles out? Can I expect assistance from them ( CRA )? I feel lost and depressed , and don't know where to turn to solve my problems. My bill for the tax services is about 600 $ , and I really can't afford to pay them any more. 
Can anyone please advise me on this? For my sanity I really need to get this worked out. 
Darren.


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## stardancer (Apr 26, 2009)

Is your LTD taxable income? If so, you will be charged tax on each year, which can add up. Don't think CRA provides a service and it would be too difficult to do over the phone.


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## CPA Candidate (Dec 15, 2013)

Darren said:


> My question is this : will CRA help me to sort my paperwork troubles out? Can I expect assistance from them ( CRA )? Darren.


They won't help you sort paperwork troubles out but they will answer questions. Filing your tax return and keeping the proper documentation is the responsibility of the tax payer. 

Why do you think you are being overtaxed?


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## Eclectic12 (Oct 20, 2010)

Darren said:


> I am in the process of filing my income tax forms for the last 7 ( gulp ) years. I am on LTD.
> I have taken my information papers to a professional tax service...


To help make sure the responses are relevant, are there other sources of income beyond the LTD? Has it changed year to year?




Darren said:


> .. but I have quite a few concerns and questions that this service could not answer. i think I may be being over taxed by a large amount.


Without some detail (not necessarily the dollar amounts but some indication of what the concern/questions are) ... it is hard to provide any feedback that will be useful.

Why are you thinking you are being over-taxed? 
Are you thinking the LTD income should be tax free? The benefits presentations at several workplaces have indicated that sometimes LTD is tax free and sometimes it is not ... depending on what the employer setup/how it is paid for etc.




Darren said:


> My question is this : will CRA help me to sort my paperwork troubles out?
> Can I expect assistance from them ( CRA )?


Do you have paperwork troubles? From what is written, it sounds like the paperwork has been taken care of ... the questions seem to be around understanding the numbers. 

If you call CRA with a specific question, they will help ... for example, asking if you need to provide a particular form or if a particular deduction applies. If you call up and say you are having paperwork problems, they will likely say it's up to you to sort the paperwork out.




Darren said:


> I feel lost and depressed , and don't know where to turn to solve my problems. My bill for the tax services is about 600 $ , and I really can't afford to pay them any more...


People here are usually good about providing info and responding to the best of their knowledge. CRA is usually good about giving time when you let them know you are working on it and are having challenges ... so take it one step at a time.

The key at this point is to indicate what the concerns are as well as why the numbers worked out by the tax service look high to you. Otherwise, there can be sympathy but not much discussion or suggestions.


Cheers


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## Spudd (Oct 11, 2011)

You can also check out a volunteer tax preparation clinic near you - they engage volunteers who are knowledgable to help people with their taxes for free, I think only if you are low income which you may not be - but worth checking on.

http://www.cra-arc.gc.ca/tx/ndvdls/vlntr/clncs/pe-eng.html


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## Davis (Nov 11, 2014)

I was going to suggest the volunteer clinic too. Some volunteer clinics may be flexible about the "low income" requirement because you are on LTD, but they have limited resources, so it could be hit-or-miss.

I am concerned that the professional tax service is not able to answer your questions. For $600, they should be able to handle this. I think your first step should be to go back to them and get tehm to explain things to you.


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## Darren (Mar 15, 2015)

Thank you all for your advice and help. I think at this point I may just file my tax forms and try to work through my questions afterward. Does this sound like a good idea?
I have two income sources. One is CPP disability income , and the other is from Manulife Financial. Because I have paid into my insurance myself , rather than my employer , I am not taxed on the income from my insurer ( at least this is how I understand things ), just the income from CPP. The year in question ( 7 years ago ) seems to tax me on both income sources, unlike the next 6 years. This is my main concern , and I don't know the reason for the difference.
Perhaps as I work my way through this , I will have some more direct , simple questions that you all can help me with. I apologize for the somewhat erratic sentencing and such, but I truly do appreciate the help you have all given. 
May I come back to this forum as I work my way through this? 
Thank you all.
Darren


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## newuser (Sep 16, 2014)

Your understanding is correct -- you are not taxed on LTD if you paid into the plan yourself. You will have to dig up documentation from 7 years ago (and earlier) to prove that you paid the premium yourself. Find you old payslips, employment contracts, benefits booklet, T4s, bank statements, or whatever necessary to prove it to the CRA.

It is also possible that prior to 7 years ago, the employer paid for the LTD premium. In that case, those benefits are taxable so you'll be out of luck.


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## OnlyMyOpinion (Sep 1, 2013)

I'd second the recommendation that you go back to the folks you paid $600 to. Write down your specific questions to review with them. It sounds like they did the work but then left all the paper with you to file? Normally if they have prepared your return for a fee, they will also file and will give you a complete copy for your own records?


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## gibor365 (Apr 1, 2011)

newuser said:


> .
> 
> It is also possible that prior to 7 years ago, the employer paid for the LTD premium. In that case, those benefits are taxable so you'll be out of luck.


It can be tricky ... Practically I work in the "same" company for many years, but it used to be Canadian owner, than US, now Indian.... when our company was Canadian, employer paid all LTD and benefits premiums, when we "became" US one - we paid LTD and employer paid benefits premiums, now we pay both LTD and patially benefits premiums


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## Eclectic12 (Oct 20, 2010)

newuser said:


> Your understanding is correct -- you are not taxed on LTD if you paid into the plan yourself. You will have to dig up documentation from 7 years ago (and earlier) to prove that you paid the premium yourself ...
> It is also possible that prior to 7 years ago, the employer paid for the LTD premium. In that case, those benefits are taxable so you'll be out of luck.


+1 for digging up the info to confirm ... or to call the company Benefits person.

It sounds like the tax firm has listed only one year as being taxable income ... so digging up the documentation may be good for if there are any questions from CRA but I'm not sure it is required as part of filing the tax return for those years. If it is required and the tax firm does not have that documentation - they should be asking for it.

The other thing to keep in mind that the current situation is that 100% of the LTD premiums must be paid by the employee for the claim payments to be non-taxable. The article quotes 2008 so this seems to have been in place for a long time.
http://www.benefitscanada.com/benefits/disability-management/disabled-disability-plans-8210




gibor said:


> It can be tricky ... Practically I work in the "same" company for many years, but it used to be Canadian owner, than US, now Indian....


Yes and this can be true for a Canadian company as well. I remember when working for a Canadian company - management switched to 100% employee LTD paid premiums.


Cheers


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## OptsyEagle (Nov 29, 2009)

Darren said:


> I have two income sources. One is CPP disability income , and the other is from Manulife Financial. Because I have paid into my insurance myself , rather than my employer , I am not taxed on the income from my insurer ( at least this is how I understand things ), just the income from CPP. The year in question ( 7 years ago ) seems to tax me on both income sources, unlike the next 6 years. This is my main concern , and I don't know the reason for the difference.


Did anyone send you a T4 slip for the LTD income, 7 years ago? 

I cannot say what kind of plan you have but in some plans where the employer wants to pay for some of the disability insurance, but is rightfully concerned about the fact that it would make the benefits taxable, they can be set up where the 1st one or 2 years of benefits is paid by the employer and the rest of the benefits to age 65 is paid by the employee. Basically a 2 part, split disability insurance plan. 

Now one might wonder why anyone would do this. The reason is: let's say an employee is 35 years old. To age 65 is 30 years of benefits. The way disability insurance works is the insurance that starts in 30 days and pays for 2 years, for example, is almost the same cost as insurance that starts in 2 years and pays for 28 more years. So if you look closely at this plan, the employer is paying and deducting probably 1/2 the cost of the entire plan but the benefits are only 2/30 or 6.7% taxable. Not being disabled, I would love a plan like this. Once I am disabled, not as much fun but still cheaper then other plans.

This structure is more common for a shareholder owned company providing insurance for himself/herself, but in smaller companies, when the employer wants to contribute to the fairly high cost of the plan (some occupations are crazy expensive), I have seen it set up this way.

I suspect a call to their human resources department or the presence of a T4 slip would confirm whether it is set up this way. If it is, then the part paid by the employer would generate taxable disability benefits to you.


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## Darren (Mar 15, 2015)

I am quite overwhelmed with all the great help , advice , and links . I have gotten a great deal of helpful knowledge from you all 
I have been paying into my insurance 100% myself ( my company has not paid any of my premiums ) since I was first hired ( 1985 ) , so I have some hope that my " bad " year of 7 years ago is not correct ( hope that makes sence ). I have also learned that I have never applied for disability benefits basic exemption ( ? )which I am told can be used for these seven years , as long as I qualify. I have picked up the application " Kit" today , and it is a top priority for me to get this application underway. Also, I have written to my CRA contact in Sydney N S , to advise of my current status ( that I am working very hard to get my papers filed ) . 
Again thank you all very much for your kind assistance.
Darren.


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