How families are hurting children's tax returns

Expert says relying on mom and dad to file tax returns is costing Canadians thousands

How families are hurting children's tax returns

Relying on family members to do tax returns is costing Canadians thousands of dollars every year.

A recent survey by H&R Block revealed that relatives are the go-to tax experts for people aged 18-35. But while this may be convenient, mom and dad are often putting a dent in their kids’ wallets.

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Valorie Elgar, an H&R Block tax expert, said that last fall the company found people, on average, were leaving $1,400 unclaimed on old returns. Elgar had even seen one person miss out on $18,000 going back years.

“It’s a windfall for people,” she said, adding that the problem starts when parents get into the habit of filing their children’s returns, only for circumstances to change.

She said: “Families are making the assumption they know everything about their child’s life even though they don’t live at home any more, whereas a tax expert would ask you questions and do an extensive interview.

“So parents will miss things. They could have kids who have multiple jobs throughout the year, and people themselves will forget about their jobs, so you are not claiming all of the slips that you have.

“A big thing that family members do is claim things incorrectly. They don’t claim tuition credits correctly, they’re claiming things they shouldn’t claim and forgetting to claims things that they should claim.

“They don’t know how to go on Canada Revenue’s website and check they have got RRSP room. There’s unclaimed RRSPs, there’s unclaimed employment slips and [they don’t know] if they owe money to Canada Revenue.
Unless you are a tax professional, you don’t know how to go on and check these things.”

Elgar said it’s tough for an average person to stay on top of all the changes to tax rules, while people’s lives change over time with marriages, divorces, children and new jobs.

She said H&R Block, which has 1,200 offices throughout the country, can review one year of your tax returns in 20-30 minutes and offers a “deeply discounted” service. The deadline for filing returns this year is April 30, while if you’re self-employed, the cut-off point is June 15. If your spouse is self-employed, your deadline is also June 15.

Elgar said it’s also worth considering the flip side of incorrect tax returns: that families are making mistakes and getting more money back than they should be.

She said: “Then the child spends the money and then Canada Revenue catches the mistake and they want the money back. And now you’re talking penalties and interest, so there are two sides to it.

“One, you’re not getting back the returns you’ve got coming to you and, two, you’ve got more refund than you should and you will owe it back. Neither is good.”

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