Yes it’s true. I just got a notice of assessment from the federal government, almost a year after I filed my 2013 taxes, and they’ve decided I owe them money. There is nothing more I hate than owing people money or people owing me money. When I go to sleep every night I like my balance sheet to be at $0 but right now it’s not – and that’s driving me crazy.
I came home from work yesterday and I had a letter from the Revenue Agency. I thought maybe it was just another statement of account, but to my surprise it was a letter stating I forgot to claim some income on my 2013 taxes and forgot to declare some of my student loan repayments; therefore I now owe them $437. WHAT!? How does $200 in forgotten freelance income and less than $80 in student loan interest equal over $400 in tax fees? I have no idea.
This isn’t the first time I’ve been audited. Back in 2011 I was audited for the previous five years and for all that time I ended up only owing the federal government $318. I wasn’t upset about that at all because I have a great accountant and in the grand scheme of things it’s a small amount of money for five years. But over $400 for one year is unacceptable in my opinion – but the government disagrees.
Where I went wrong
My current accounting system consists of an Excel spreadsheet and two envelopes full of all my receipts. I divide them into two categories: food and other business expenses. I would like to say I add up my expenses each month, staple all receipts together and mark them into my Excel spreadsheet but that wouldn’t be true – although it was my intention last January. I think it lasted about three months and when spring came around I just started shoving my receipts in the envelops.
In February I’ll spend a day or two sorting through my receipts and adding up all my income and expenses for the year so I can bring my papers to the accountant’s office in March. Not the most efficient record keeping option, I know.
I would love to double check the federal government’s records because I’m one of those people who honestly believe I’m being screwed over all the time – especially when it comes to money. I don’t trust anyone, but my accountant is probably going to charge me $200 to verify the government’s notice of assessment. I don’t want to pay that amount on top of what I supposedly owe the government.
What I’m going to do differently in 2015
This year I am going to keep better track of my income and expenses. I promise. Why? Because I have to. Spending two days collecting receipts and trying to remember everything I did over the last year is not my idea of fun. If I spent 30 minutes each month adding up all my income and expenses it would save me a lot of trouble during tax time. So that’s what I’m going to do.
You’re probably thinking, why don’t you just get a book keeping service? Because I’m not sure how they work, but I’m open to suggestions. Does a bookkeeping service keep track of my income and expenses in both Canada and the United States? Does it track payments received and sent via PayPal and my bank accounts? All suggestions are welcome.
Originally published on Dinks Finance
Photo from National Liberty Party