The end of the year may mean a fresh start and New Year’s resolutions. But it is also the deciding date for many items on your 2012 tax return. December 31st determines:
• your marital status: This is determined on the 31st, so even if you got married on December 30, you will report your status as married on your 2012 tax return. The same applies if you have separated from your spouse. Common-law spouses need to be separated for at least 90 days. You do not get to select your marital status: you need to report it correctly, depending on your situation at the end of the year.
• your province of residence: Every taxpayer files a federal and provincial return. The provincial return you need to file is determined on December 31st of the tax year. So if you moved across the country in December, you will file a return based on where you lived on December 31st. If you move from a province with a higher tax rate, you may receive a bigger refund; alternately, moving to a higher tax-rate province may mean a larger tax bill.
• charitable donations: If you want to claim charitable donations on your 2012 tax returns, the receipts have to be dated in 2012. Donations made in 2013 will have to wait for another return.
• medical expenses: you can claim the calendar year of medical expenses. Or you have the option to claim your best 12 months to maximize your tax savings, as long as one of the months is in the tax year. So you could claim medical expenses from February 2011 to January 2012 on your 2012 tax return if that gives you the most tax savings.
So when you ring in the New Year, you have already started preparing your 2012 tax return, even if it is unintentional.
