Tax season can be overwhelming, and making mistakes on your income tax and benefit return can lead to delays, lost refunds, benefit interruptions, or even audits. To help you avoid common pitfalls, we’ve compiled a list of the most frequent tax errors that the Canada Revenue Agency (CRA) sees—and how you can prevent them.
At Nguyen Scott LLP, we specialize in accurate, hassle-free tax preparation so you can maximize your refund and avoid unnecessary penalties.
📞 Need expert tax help? Contact us today!
📍 St. Albert & Leduc: 780-458-5479
📍 Drayton Valley: 780-542-9292
💻 Visit us at nsllp.ca
The Most Common Tax Filing Mistakes & How to Avoid Them
1️⃣ Not Reporting All Income
Many people forget to report all their income, which can trigger CRA audits or reassessments. The CRA requires you to report all income, including:
✔️ Tips & gratuities
✔️ Temporary or part-time jobs
✔️ Side gigs or business income (e.g., selling goods or services)
✔️ Income from digital platforms (ridesharing, peer-to-peer sales, online business, influencer earnings)
✔️ Foreign income (interest, investments, rental income from outside Canada)
💡 Tip: If you’re unsure whether something is taxable, assume it is and report it. The CRA considers all sources of income, whether received in cash, bank transfers, or non-monetary benefits.
2️⃣ Not Keeping Business Income & Expense Records
If you’re self-employed or a sole proprietor, keeping organized records is crucial. Failing to document business income and expenses properly could lead to tax penalties or disallowed deductions.
💡 How to Avoid This Mistake:
✔️ Keep copies of all invoices, receipts, and bank statements.
✔️ Reconcile your books with earnings statements from online platforms or clients.
✔️ Ensure your expenses are legitimate business costs (e.g., office supplies, business mileage).
CRA audits can be stressful, but well-kept records make the process much easier.
3️⃣ Not Updating Personal Information
If your address, direct deposit details, or marital status changes, you must update the CRA as soon as possible. Failing to do so can delay tax refunds and benefit payments.
💡 How to Stay Up to Date:
✔️ Log in to CRA My Account and update personal details.
✔️ Report marital status changes by the end of the following month.
✔️ Ensure your direct deposit information is correct.
Waiting until tax time to update your information can cause unnecessary delays!
4️⃣ Claiming Personal Expenses as Deductions
Some taxpayers incorrectly claim personal expenses as tax deductions, but the CRA does not allow deductions for personal costs such as:
🚫 Funeral and wedding expenses
🚫 Loans to family members
🚫 Losses from selling personal-use property (e.g., your car or home)
💡 How to Avoid This Mistake:
✔️ Only claim expenses directly related to earning income.
✔️ Keep detailed records of business-related expenses to support deductions.
If the CRA finds ineligible claims, they will adjust your return and may penalize you for misreporting.
5️⃣ Writing Partial Payments on a Paper Return
If you’re paying only part of your tax balance, do not write the partial payment amount on your paper return. The CRA processes tax payments separately, so the amount you send will automatically be applied to your tax balance.
💡 What to Do Instead:
✔️ Make payments online through CRA My Account or by mail.
✔️ Contact the CRA if you need to set up a payment arrangement.
6️⃣ Filing Form T1135 Late (Foreign Income Verification Statement)
If you own foreign assets worth more than $100,000 CAD, you must file Form T1135 to report those holdings.
🚨 Failing to file this form accurately and on time can lead to large penalties.
💡 How to Avoid This Mistake:
✔️ Check whether your foreign investment accounts exceed $100,000.
✔️ File Form T1135 along with your tax return—it has the same deadline.
✔️ If unsure, speak with a tax expert to avoid CRA penalties.
How These Mistakes Can Affect You
Making any of these mistakes can result in:
❌ Delays in tax refunds & benefit payments
❌ CRA reassessments or audits
❌ Loss of deductions & credits
❌ Late filing penalties & interest charges
💡 How Nguyen Scott LLP Can Help:
- Ensure all income is reported accurately
- Claim only eligible deductions & credits
- Help self-employed individuals organize tax records
- Guide you through foreign asset reporting
- Prevent late filing penalties & CRA issues
Don’t Let Tax Mistakes Cost You – Contact Nguyen Scott LLP Today!
Taxes don’t have to be stressful. Whether you need help with accurate tax filing, self-employed income, or foreign asset reporting, our expert accountants ensure you stay compliant and maximize your refund.
📍 St. Albert & Leduc: 780-458-5479
📍 Drayton Valley: 780-542-9292
💻 Visit us at nsllp.ca