My Writing > T1 Tax Return Checklist


1 Feb 2005

 

ProConnection: Article

ProConnection Newsletter, Published Online at Intuit Canada website, http://www.accountant.intuit.ca/Proconnection February 2005



T1 Tax Return Checklist

Eileen Reppenhagen, QuickBooks ProAdvisor




I prepare a comprehensive checklist for personal tax season every year. Every year it seems to get longer.

"Q" Will a checklist work?

"A" A substantial number of my clients return each year with the list ticked off with their documents neatly piled in the same order as the checklist.

"Q" Who uses the checklist?

"A" Clients you want to keep. These might be the same happy clients who pay you before they leave your office.

"Q" Why do we prepare checklists?

"A" How many times have you advised your clients, when you reviewed the hours spent on their return, that the cost of their tax return preparation could be significantly reduced by comprehensive and complete documentation?

"Q" Why is it so expensive to prepare tax returns?

"A" Every time you put the client’s files away with a list of missing documentation and queries, the cost of tax preparation increases exponentially. Meanwhile, you have moved on to other work, so it’s like starting all over again.

"Q" Why not send this checklist to your clients?

"A" I usually put a brief note about deadlines in an email and enclose this checklist as an attachment clients print to check and return to me.

To assist you this tax season I am enclosing 4 checklists that will help save you time and money.

1. INCOME

Income (Total Income on Line 150) Documentation
 

Salaries, Commissions, Other Employment Income including: Tips from all sources, GST rebate from previous year, Royalties from your own work and/or an invention

T4, T4A, Tips and Gratuities Daily Log, GST Rebate, T5 Royalties in Box 17
  Pension and Annuity Income from all sources including CPP, OAS, RRIF's and foreign pensions T4A(OAS), T4A(P), T4RIF, T3, US Social Security, Foreign Pension statements, deposit information and foreign exchange rates, Status of pensions, exempt or not exempt
  Employment Insurance and other benefits T4E, Statements of repayment of benefit
  Taxable amount of Dividends from taxable Canadian corporations T5, T3, Schedule 4
 

Interest from all sources including Canada Savings Bonds, Strip Bonds, Treasury Bills, Mortgages held and Investment income

T5 , T3, T5008, Broker and Mutual Fund Statements, Bond Descriptions, Schedule 4
  Net Partnership Income, limited or non-active partners T5013, Resource Form, Certified Film & Production reports
  Rental Income or Loss Tenant information, rents received, receipts for expenses, bank statements, debt information and interest, Calculation of cumulative profit (REOP) for ITA S. 3.1, Purchase documentation for Capital cost, UCC, Asset classes for each property, T776 for each property
  Taxable Capital Gains or Losses for all capital, personal or listed property Broker statements, Purchase/Sale agreements, Closing statements, Option agreements, Mutual fund statements, Closing costs, Schedule 3
  Support payments received, Child Support received Separation agreement, Proof of receipt of payment, Payee Name, Address and SIN #, T1158 Registration of Family Support Payments
  RRSP income T4RSP, RRSP statements
  Line 130 Other Income Foreign income including deposit and foreign exchange information, T3, Box 22, 26 (net of 31,35,46,47), Eligible Death benefits on T3 or T4A, Pension Income on T3 Box 46, Scholarships, Lump sums etc. See Schedule for Line 130
  Self Employment Income or Loss from business, profession, commission, farming or fishing Sales invoices, purchase documentation, bank statements, receivables, payables, accruals, asset purchases, UCC classes, Forms T2124, T2032, T2042, T2121, Contract Payment Reporting T5018, Reserve calculations, Calculation of cumulative profit (REOP) for ITA S. 3.1
  Worker's Compensation Benefits T5007 Box 10
  Social Assistance Payments T5007 Box 11
  Net Federal Supplements T4A(OAS) Box 21

2. DEDUCTIONS

Deductions (to arrive at Taxable Income on Line 260) Documentation
  Registered Pension Plan (RPP) T4 Box 20 or T4A Box 32
  RRSP Schedule 7, receipts, broker statements, mutual fund statements, CRA Statements for Home Buyers, Life Long Learning
  Saskatchewan Pension Plan Statement, receipts
  Annual Union, Professional or like Dues, Professional Liability Insurance T4 Box 44, slips and receipts
  Child Care Expenses T778, slips, receipts, Payee name, address, SIN # or BN#, doctor's letter supporting infirmity, calendar or day timer to support claim in Part C
  Disability Supports Invoices, proof of payment, T4 Summary, T4, Timesheets, Payee name, address, SIN # or BN# for attendant, proof of qualification for Disability T2201, proof of expenditure for work or school
  Business Investment Loss Documentation of disposition of shares or loans to a qualified small business corporation, ABIL form, Receipts, contracts
  Moving Expenses T1M, receipts, logs, addresses before and after, dates, income applicable
  Support Payments made Receipts, proof of payment, separation agreement, T1158 Registration of Family Support Payments
  Carrying Charges and Interest Expense Schedule 4, Receipts, bank statements, proof of payment, loan or mortgage statements, Recommend review of IT 533 Interest deduction policy new October 31, 2003, Calculation of cumulative profit (REOP) for ITA S. 3.1 effective January 1, 2005, source by source
  CPP or QPP contributions on self-employment or other earnings Schedule 8
  Exploration and Development Expenses T1229, Resource Summary
  Other Employment Expenses T777, T2200, proof of payment, Km log, gas, insurance, repairs, air care, vehicle lease or purchase, interest, loan documentation, vehicle description, GST370 signed with Employer's BN#, Home office costs as applicable, Legal expenses to collect salary, repayment of WCB, etc. see form
  Clergy Residence Deduction Employer completed certification on CRA form
  Other Deductions See details Line 232
  Social Benefits Repayment Form in ProFile
  Canadian Forces Personnel and Police T4 Box 43
  Employee Home Relocation Loan T4 Box 37
  Security Options See details Line 249
  Other Payments If income reported on line 147 see line 250 in the guide
  Losses of other years, capital gains deduction Various Schedules in ProFile
  Northern Residents T2222
  Additional Deductions See details Line 256

3. PERSONAL TAX CREDITS

Personal Tax Credits Documentation
  Spousal Spouses tax return
  Eligible Schedule 5 Details of dependant, net income, documentation certifying infirmity if applicable
  Infirm 18 or older Schedule 5 Details of dependant, net income, documentation certifying infirmity if applicable
  Caregiver Schedule 5 Details of dependant, net income, documentation certifying infirmity if applicable
  Disability T2201
  Disability Supplement Child care or attendant care expenses claimed for dependant by anyone
  Disability Transferred from a dependant T2201, Schedule 5 Details of dependant, net income
  Interest on Students Loans Statement from financial institution, proof of payment, amounts carried forward from previous 5 years
  Tuition and Education T2202A, T2202, TL11A,B,C,D, Schedule 11
 

Tuition and Education Transferred from a child or grandchild

T2202A, T2202, TL11A,B,C,D, Schedule 11, Taxable income, Personal tax credits, SIN #, name, birth date of child or grandchild
  Amounts Transferred from spouse or partner Schedule 2 and spouses tax return
  Medical and prescribed devices for self, spouse and all dependents Receipts, payroll stub or letter from payroll for premiums on extended health and dental insurance, certification of disability, infirmity, Payee name, address, SIN# or BN#, breakdown of attendant care for retirement homes etc. See S. 118.2(2) and Regulation 5700 of the ITA for further details
  Medical Notch Provision, allowable amount of medical expenses for dependants 18 and over Line 236 for dependents 18 and over
  Donations and Gifts, political donations Receipts, proof of payment

4. OTHER USEFUL INFORMATION

Other Useful Information Documentation
  Tax Paid by installments, balance owed Proof of payment, statements from CRA
  Employee and Partner GST/HST Rebate GST 370 signed by Employer (with BN#)
  Provincial Tax Credits Slips, receipts, proof of payment, statements of account
  US Non Resident Alien Tax Return if you worked in the US and have US Source income Work Visa information, Number of days in the USA per year, plus previous 2 years. Please contact a professional who prepares US tax returns for more information
  Assessments, re-assessments, correspondence, Child Tax Benefits, GST credits All documents and statements received from CRA
  Proof of Ownership and Liability including all Foreign Property and Investments List of all owned or leased assets, all liabilities and relationship to assets, investments, business operations, Calculation of cumulative profit (REOP) for ITA S. 3.1
  Citizenship and residence during and at the end of the year Proof in the form of utilities bills, property tax, etc.
  Low income and other benefit plans including provincial medical premium assistance, Veterans Affairs, property tax grants and deferral for disability. Gas tax refunds

See useful links at www.taxdetective.ca

Problem

When there is missing documentation, how do you handle the process?

Solution

Here’s what I recommend:

  1. Set up a Folder for Notes on the Microsoft Outlook Bar that reads ‘2004 Client Notes’

  2. For each client, make a Note with the client's name at the top

  3. Sort the client’s Notes in Alphabetical order in this Notes Folder

  4. Record what is missing and any queries regarding the client in their Notes File.

  5. Cut, paste and edit the queries to an email and send it to the client

  6. Advise the client that work has stopped until ALL of the missing documentation is received

  7. Print a copy of the note and the email

  8. Place the note and the email to the top of the client’s file

  9. List the client's name in the Outlook Task list as a reminder to follow up

  10. Assign a date to follow up on the Task

  11. Put the client's file away and move on to other client’s work

  12. If your client calls to ask if their return is ready, refer to the email on the top of the file

  13. Note date of call and notes regarding the conversation

  14. Follow up to ensure that the client understands that lack of documentation has stopped the process

  15. Days or weeks later, missing information arrives, clear the Task from your waiting Task list to your active Task list

  16. Update the Note with responses, clear missing information and queries

  17. More queries as a result of new information, start over at 2) above

  18. Check to see if the return is now complete, enter the new data, if this leads to more questions, start over at 2) above

  19. If complete, review, assemble for signing and contact your client

How will I know if this checklist worked for you?

Why don’t you let me know after tax season? Drop me a note, to let me know what worked and what did not work, at my email address below.


 

 

Eileen Reppenhagen, QuickBooks ProAdvisor
Tel: 1 604 943.7414
eileen.reppenhagen@gmail.com

 

 


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