Most tax mistakes aren’t dramatic. Nobody’s hiding offshore accounts. It’s usually a forgotten slip, a receipt that went in the recycling, or a credit someone didn’t know existed. Small stuff. But small stuff adds up, either as money left on the table or as a letter from the CRA eight months after you thought you were done.
We prepare a lot of returns every season at Taxwala, and we review plenty that people filed themselves before coming to us. The same errors show up again and again. Here are the ones we see most often, why they matter, and what to do about each.
1. Filing before all your slips have arrived
This is the big one. People file in early March, feel organized, and then a T5 or T3 arrives a few weeks later.
The CRA receives a copy of every slip issued under your SIN and runs it against your return through its matching program. If income is missing, they’ll find it, usually months later, and send a reassessment with interest added. If it happens twice within four years and the amount is $500 or more each time, you can also face a repeated failure to report penalty, which can be as much as 10% of the income you left out.
How to avoid it: Wait until early April if you have investments outside an RRSP or TFSA, since T3 slips often aren’t issued until the end of March. Compare this year’s slips against last year’s return so you notice if an account or employer is missing. Our tax documents checklist walks through what to collect.
2. Not filing because you had little or no income
We hear this from students, stay-at-home parents, newcomers and retirees: “I didn’t earn anything, so I don’t need to file.”
Technically, you may not owe tax. But filing is what triggers most government benefits. Without a return, you won’t get the GST/HST credit, the Canada Child Benefit, the Canada Workers Benefit, or in Ontario, the Ontario Trillium Benefit. For CCB specifically, both spouses have to file, even if one had zero income. When a spouse doesn’t file, the family’s payments can stop.
Students lose out in another way too. Unused tuition amounts only carry forward if you file, and they can save you real money once you’re earning a full salary.
How to avoid it: File every year, even with no income. It’s usually a short, simple return.
3. Filing late when you owe money
If you have a balance owing and file late, the CRA charges a late-filing penalty of 5% of the balance, plus 1% for each full month the return is late, up to 12 months. If you were also charged a late-filing penalty in one of the previous three years, it can double to 10% plus 2% a month, for up to 20 months.
On top of that, interest on any unpaid balance starts on May 1, regardless of your filing deadline.
This catches self-employed people in particular. Their filing deadline is June 15, but their balance is still due April 30. Plenty of people file on June 14, pay that day, and are surprised to see six weeks of interest.
How to avoid it: If you think you’ll owe, file on time even if you can’t pay in full. The penalty is based on filing, not paying. Then pay what you can and set up a payment arrangement for the rest. And if you’re self-employed, aim to pay by April 30 even if you file later.
4. Mixing up deductions and credits (and missing both)
A lot of people know there are “things you can claim” but don’t really know the difference between a deduction and a credit, so they miss some entirely.
A deduction, like RRSP contributions, childcare or union dues, reduces your taxable income. A non-refundable credit, like medical expenses, donations or tuition, reduces the tax you owe. A refundable credit can actually pay you money even if you owe nothing.
The ones people most often miss:
- Medical expenses, especially private health premiums deducted from your pay or paid yourself, dental work and prescription glasses
- Moving expenses when you moved at least 40 km closer to a new job or school
- Union or professional dues you paid yourself
- Interest on student loans from a government program
- The Canada caregiver amount if you support a family member with an impairment
- The disability tax credit, which many eligible people never apply for
How to avoid it: Go through your year month by month. What did you pay for that wasn’t groceries or rent? A surprising number of those expenses turn out to be claimable.
5. Claiming things you can’t actually claim
The opposite problem is just as common, and it’s the one that leads to review letters.
Commuting between home and your regular workplace isn’t deductible for employees. Neither are gym memberships, regular clothing, or most meals. Several credits people remember from years ago, including the public transit credit and the federal children’s fitness and arts credits, no longer exist.
Home office expenses are another trap. Since the temporary flat-rate method ended, employees can only claim home office costs using the detailed method, and they need a signed Form T2200 from their employer. Claiming without it is a fast way to have the deduction denied.
How to avoid it: If you’re not sure something qualifies, ask before you claim it. Being denied a deduction later costs you the tax plus interest.
6. Not keeping receipts
When you file electronically, you don’t send receipts with your return. So a lot of people stop keeping them. That’s fine right up until the CRA sends a review letter asking you to prove your medical expenses, donations, childcare or business costs. No receipt usually means no claim.
The CRA generally expects records to be kept for six years from the end of the tax year they relate to.
How to avoid it: Take a photo of every medical and donation receipt the day you get it. Keep them in one folder per year. That’s all it takes.
7. Getting the medical expense period wrong
Medical expenses don’t have to follow the calendar year. You can claim them for any 12-month period that ends in the tax year. If you had big dental bills in November 2025 and more in spring 2026, choosing a period that captures both can give you a much bigger credit.
And since the credit only applies to the amount above a threshold based on income, it usually works out better to claim the whole family’s medical expenses on the lower-income spouse’s return.
How to avoid it: Lay out all your medical receipts by date before choosing your period, and run the numbers on both spouses’ returns.
8. Over-contributing to an RRSP or TFSA
Your RRSP deduction limit is on your Notice of Assessment. Your TFSA room is on CRA My Account. Neither is something your bank tracks for you across multiple institutions.
If you go over your RRSP limit by more than the $2,000 buffer, the excess is taxed at 1% per month until you take it out. TFSA over-contributions are taxed at 1% per month too, with no buffer. A common TFSA mistake is withdrawing money and putting it back in the same year, not realizing withdrawals only add back to your room the following January.
How to avoid it: Check your actual room before contributing, especially if you have accounts at more than one bank. If you’ve already gone over, withdraw the excess as soon as possible to stop the penalty growing.
9. Missing pension splitting and other family planning
Couples are taxed as individuals in Canada, but the tax system gives them a few ways to even things out. Retirees can split up to half of their eligible pension income with a spouse. Donations can be pooled on one return. Medical expenses can go on whichever return benefits more. Unused tuition can be transferred to a parent or spouse.
When each person files separately, or uses different software, these opportunities often get missed.
How to avoid it: Prepare spousal returns together, side by side. If retirement is coming up, it’s worth having a proper tax planning conversation, because timing RRIF withdrawals and pension income can make a difference for years.
10. Treating side income as if it doesn’t count
Gig work, freelance projects, selling on Etsy, short-term rentals. All of it is generally taxable, and there’s no minimum threshold below which it becomes tax-free.
The CRA is also getting better at seeing this income. Since 2024, many digital platforms report seller and driver earnings directly to the CRA. Rideshare drivers have an extra wrinkle: they must register for GST/HST from their first fare, regardless of how much they earn. That’s different from delivery drivers and most freelancers, who only need to register once they pass the $30,000 small supplier threshold.
How to avoid it: Report it, and claim your legitimate expenses against it, like vehicle costs, phone, platform fees and supplies. If you’ve missed reporting it in past years, fixing it before the CRA contacts you is almost always the better path. We explain the specifics on our gig workers tax page.
11. Not paying instalments when you should
If you’re self-employed, have significant investment or rental income, or earn income with no tax withheld, you may need to pay instalments during the year. The general rule is that instalments are required if your net tax owing is more than $3,000 in the current year and in either of the two previous years.
The CRA sends instalment reminders, but they’re easy to ignore. If you skip them, you’ll pay instalment interest, and a large balance at tax time can be a real shock to your cash flow.
How to avoid it: Look at last year’s balance owing. If it was over $3,000, plan for quarterly instalments, or at least set money aside each month. Our self-employed tax service includes instalment planning for exactly this reason.
12. Ignoring a letter from the CRA
This one turns small problems into big ones. A CRA review letter often just asks you to send receipts for something you claimed. If you respond on time with the right documents, it’s usually closed quietly. If you ignore it, the CRA will reassess you without your input, typically by denying the claim, and add interest.
If you disagree with a reassessment, you generally have 90 days from the date on the notice to file a Notice of Objection. Miss that window and your options get narrower.
How to avoid it: Open every CRA letter and note the deadline. If you’re unsure what it’s asking, get help early. Our CRA audit support team can review the letter and tell you what you’re dealing with.
Already made one of these mistakes?
Honestly, most of them are fixable. The CRA lets you request changes to a return for any year ending in the previous 10 calendar years. You can usually do this online through CRA My Account using the Change my return option, or by submitting Form T1-ADJ. If you missed a credit, you may get money back. If you missed income, correcting it yourself is generally better than waiting to be caught.
For larger issues, like several years of unreported income, the CRA’s Voluntary Disclosures Program may reduce penalties if you come forward before they contact you. It has specific conditions, so it’s worth getting advice before applying.
And if penalties or interest came from circumstances outside your control, such as a serious illness or a natural disaster, you can ask for relief under the taxpayer relief provisions.
Frequently asked questions
What’s the most common tax mistake in Canada?
In our experience, it’s missing income slips, particularly T5 and T3 investment slips that arrive late. The CRA’s matching program usually catches them, which leads to a reassessment with interest.
Will the CRA penalize me for an honest mistake?
Usually not with a penalty, as long as it’s a one-off. You’ll generally owe the extra tax plus interest. Penalties tend to apply for late filing, repeated failure to report income, or careless and deliberate errors.
How far back can I fix my tax return?
You can generally request an adjustment for tax years ending in any of the previous 10 calendar years.
Should I fix a mistake myself or wait for the CRA?
Fix it yourself. Proactively correcting an error shows good faith, can reduce interest, and avoids the stress of an unexpected reassessment.
Want a second pair of eyes?
If you’d like your return prepared properly the first time, or want us to look over past returns for anything that was missed, take a look at our personal tax filing service. When you’re ready, you can send your documents through our secure Tax Intake Form, or just reach out with a question.
This article is general information about Canadian tax and isn’t advice for your specific situation. Amounts and rules change, so check the details with a tax professional or the CRA before you act on them.