Seven Tax Mistakes Canadians Make Year After Year

Tax season. Time to gather up all those tiny bits of paper that employers, banks and various entities send to allow you to track what you spent and earned.

But are you making mistakes that cost you money when you file your income-tax return?

Here are seven of the most common mistakes we make (or deductions we overlook) every year at tax time:

Not filing. You'd think filing would be a no-brainer, yet many Canadians forget to file, neglect to file, or decide not to file for a variety of reasons. You might figure that since you didn't make much this year – say, less than the personal deduction threshold ($10,320 for 2009) – that you can skip filing. What you may not realize is that tax returns are used to trigger the GST/HST Credit and various child benefits – money you're entitled to! And don't forget: you can file for past years you missed, as well.

Health insurance. You took some personal time off and decided to go to the Dominican Republic. Did you buy health and travel insurance for it? The portion for health insurance might be deductible. If you have private health insurance, remember to claim only the personal portions. Unfortunately, vitamins and supplements are not deductible unless you got a doctor to prescribe them for you and picked them up from a pharmacist.

Moving expenses. If you moved 40 kilometres or more to be closer to work or school, you can claim some moving expenses. Make sure to keep all the paperwork – and keep it handy, too: this is the one class of expenses most likely to get your return audited.

Caregivers. You can get a non-refundable credit not just for taking care of children but also for taking care of aging parents and relations. If they made less than $16,000 this one is well worth looking into.

Spousal claims. (This also applies to common-law partners.) Certain deductions can be combined and claimed by one spouse or the other (medical claims and charitable donations are the biggy for this one.) This applies even if the expenses are in the name of the other spouse/partner.

Identification. A surprising number of people screw this up. Simple misidentification can slow down the processing of your refund. Proofread this information carefully, or have your spouse or a trusted friend check it. Did you transpose the digits of your Social Insurance Number (SIN)? Did you remember to put down the SIN of your spouse/partner or child? Did you put down a current address where you can receive your refund cheque?

Keeping paperwork. You've just finished filing electronically. Now you can throw away all that nasty paperwork and save some space, right? Nope. You have to keep it available in case you are audited. If you don't have it, a claim can be denied in subsequent years. Audits can occur up to six years after filing, so that means you have to keep everything for six years.