Gather your documents Internal Revenue Service

If you do not file your taxes on time, the CRA may charge you a late filing penalty of 5% of your balance owing, plus 1% for each additional month late. To reduce your tax owing and/or maximize your tax refund, you should make the best possible use of all your available deductions and credits. If in doubt as to your tax filing obligations, it may also be beneficial to consult a tax professional who can support you throughout the process. There is no specific age when you need to start paying income tax in Canada. Instead, you’re required to pay income tax once you start earning a certain amount each year. Put any tax refund you get to good use, such as paying down credit card debt or adding to your emergency fund.

• For instance, I get 1099-INTs every year from Capital One, Discover and the credit union I’m a member of because that’s where I keep my savings.
• For 18-year-olds stepping into adulthood, understanding whether they can file taxes independently is critical.
• While Yared doesn’t need to send these documents to the CRA, they should store them in a safe place.
• You can check your payment status through My Account or call the Individual Tax Account Balance Automated Service.
• The decision to claim an 18-year-old as a dependent has significant financial implications.
• Now, you can simply input your financial data into online tax software (like one of TaxAct’s digital or download solutions) and follow the steps to file your own taxes quickly and efficiently.

Determine Whether You’re Required to File

Proper tax filing gives you access to valuable benefits like the GST/HST credit, Canada Carbon Rebate, and Canada Child Benefit. These programs can substantially support your household budget during your settlement in Canada. The Canada Carbon Rebate (formerly the Climate Action Incentive payment) helps offset federal retained earnings pollution pricing costs. Residents of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Saskatchewan receive quarterly payments.

Moving expenses

• Learn how to manage your finances and make sure you’re taking advantage of the different credits and benefits you could be eligible for.
• Here’s everything you need to know about how to file taxes as a teenager and young adult.
• If you filed using a tax professional, they can help you correct the mistake and file an amended return.
• If you cannot afford to pay the full balance owing, you can contact the CRA to set up a payment arrangement.

However, all earnings must be tracked, even if they fall below this threshold. All information, including rates and fees, are accurate as of the date of publication and are updated as provided by our partners. Some of the offers on this page may not be available through our website.

Filing Requirements for New Adults

• The key is to ensure everything is kept in one place where you can easily find it later.
• You still have to file a tax return if you had enough income, but when you prepare your return, you’ll have to indicate that you can be claimed as dependent on someone else’s return.
• The CRA accepts the Bank of Canada exchange rate or other verifiable sources that are accessible to more people.
• If you’re expecting a refund, you might be eager to file your tax return as soon as you can.
• And if you wish to be eligible for Canadian citizenship, you’re required to have met your tax filing obligations.

If you have a business or a healthy side gig, how to file taxes for the first time at 18 on the other hand, you might consider working with a local CPA. Average is based on all student returns prepared at H&R Block company owned locations in Canada during the period January 1 to April 30, 2024, for the 2023 tax year for regular tax returns. The average refund amount calculated for students was over $1,564 for students who were entitled to a refund; cannot be guaranteed and varies based on each individual tax situation. Of all students who filed their taxes in a company owned H&R Block location 85% had a positive refund amount. The GST/HST credit provides quarterly tax-free payments to help with sales taxes if you have low or modest income. You can apply right away as a newcomer without waiting for your first tax return.

How To Do Your Taxes for the First Time: A Go-To Guide for First-Time Filers

Pricing can depend on the complexity of your return or the amount of support you need. Many major tax software providers offer access to human preparers or tax help, too. The government decides how much tax you owe by dividing your taxable income into chunks — also known as tax brackets — and each chunk gets taxed at the corresponding tax rate.

Deductions and credits

Unlike the AOTC, the LLC is non-refundable and can only reduce taxes owed to zero. Income phase-out thresholds for the LLC are slightly lower, with single filers capped at Interior Design Bookkeeping $80,000 and joint filers at $160,000. You can pay your taxes on the IRS website directly from your bank account for free, or with a debit or credit card for a fee. Using a credit card that offers rewards or an introductory welcome bonus could earn you some benefits; just make sure you pay it off immediately to avoid carrying a balance.

To claim a dependent for tax credits or deductions, the dependent must meet specific requirements. Filing as head of household instead of single can also result in a lower tax rate, potentially reducing your tax bill or increasing your refund. And the qualifying widow(er) with dependent child status allows a surviving spouse to use the married filing jointly tax rates (and higher standard deduction) on an individual return. Staying organized will save you time and stress when it’s time to file your taxes.

Your notice of assessment needs permanent storage since it has important information for future returns. Taking stock of your financial situation is vital before filing your first Canadian tax return, especially with assets you owned upon arrival. Your Social Insurance Number (SIN) works as your tax ID in Canada and opens the door to the Canadian tax system.

Filing your child’s tax return

If, for example, you invested in crypto or traded stocks as a minor, you may be required to file a tax return even if you made less than the standard deduction. If you’re a first-time tax filer, an easy-to-use tax solution like TurboTax can help guide you through the process. TurboTax asks you questions about your situation and then adds the right forms to your return based on your answers. You can import your CRA data directly into TurboTax using Auto-fill my return. Then TurboTax does the calculations for you, double checks your return for errors and alerts you of errors before you file.