The tax systems that apply to people in the U.S. and Canadians share some core similarities. Citizens pay federal taxes. In the United States, most states charge income tax, while Canadians pay provincial taxes. Consumers also pay sales tax. Once a year, citizens must file their taxes. Those who've overpaid throughout the year receive a refund, while those who've underpaid must pay additional tax fees. People who owe taxes in Canada can use this checklist to simplify the process of filing taxes.

Gather all the items you need for filing taxes.

Annual tax filings involve reporting your income. You'll either need a record of payments received if you're self-employed or a T4 from your employer. A T4 is comparable to the W-2 form issued in the United States. It provides critical information about the employer, your gross income during the applicable tax year, and the amount deducted from your taxable income. Employers deduct contributions to the Canada Pension Plan (CPP), your Registered Pension Plan (RPP), Employment Insurance (EI), and income tax throughout the year. Canadians living in Quebec may also have deductions for Quebec Pension Plan (QPP) payments.

Additional deductions may be for charitable donations, union dues, and your Provincial Parental Insurance Plan (PPIP). All deductions from your gross income, including union dues, are tax-deductible, meaning you do not pay federal income tax on these deductions.

You may have additional documents you need to complete your taxes, such as receipts for other charitable donations, tuition fees, or child care.

Use an online program for filing taxes.

Review online tax programs, such as Wealthsimple Tax and TurboTax. Weathsimple SimpleTax is a free program anyone can use to file their taxes. Since it's free, it may not have all the features TurboTax offers, so you must review the features available to ensure you make the best choice when choosing an online tax program. The Canada Revenue Agency recommends filing online for several reasons. Canadians benefit from an expedited filing process because online filing ensures their taxes are received immediately. Using tax software and filing online also prevents your tax records from being lost or delayed in the mail. Delay issues have been an issue during the COVID-19 pandemic, prompting people to use online services more than ever before.

Consider hiring a tax expert to file your taxes online.

Multiple deductions can complicate the tax filing process. You may have additional complications if you have both employee income and additional sources of income, such as rental income or business income. You may have additional retirement accounts handled by a financial planner. You may also have business expenses you can claim against business income.

Instead of using online tax filing software yourself, you may opt to use sophisticated tax software that allows you to claim additional benefits, such as rental income and rental business deductions. You can also consider hiring a tax accountant to file your taxes online on your behalf. This ensures you can capitalize on all potential deductions, ensuring you reduce your tax burden legally.

Avoid common filing mistakes.

Common filing mistakes include providing the wrong tax identification number, wrong bank account numbers, and filing status mistakes. When you receive tax documents from your employer, check to ensure they've entered the correct information. Check your social insurance number and make sure it's correct, or you won't be able to use the T4. If you're filing joint taxes with your spouse, ensure you have their correct social insurance number and tax information. Double-check all numbers and calculations and ensure all appropriate documents are signed before filing your taxes.

Few people look forward to completing their taxes each year. However, filing taxes doesn't have to be complicated, and tax software can simplify the process and help you maximize your tax return. Once you gather all the tax documents you need, review your software options. You can also consider hiring an accountant to file your taxes online.