The Biggest Tax Mistakes Canadians Make Every March

Andrew Tricomi - Mar 23, 2026

March is when tax season really heats up for Canadians. The RRSP deadline has just passed, T4s are arriving in mailboxes, and millions of us are logging into CRA My Account wondering if we've missed something important.

Every year, we see the same costly mistakes repeated by otherwise financially savvy people. Some of these errors result in missed refunds. Others trigger penalties and interest charges that can add up quickly. A few can even prompt a CRA review.

The good news is that most of these mistakes are entirely preventable. Here's what to watch for as you prepare your 2025 tax return.

Missing the RRSP Deadline (or Rushing It)

The RRSP contribution deadline for the 2025 tax year was March 2, 2026. If you missed it, any contributions you make now will count toward your 2026 taxes instead of reducing your 2025 tax bill.

But here's the less obvious mistake: rushing to contribute at the last minute without checking your actual contribution room. The CRA allows a $2,000 lifetime buffer for over-contributions, but anything beyond that triggers a penalty of 1% per month on the excess amount until it's corrected.

For example, if you over-contribute by $5,000 beyond your limit, you could face $30 in penalties for every month the excess remains in your account. Over a year, that's $360 gone for no good reason.

How to avoid it: Check your contribution room on your most recent Notice of Assessment or log into CRA My Account before making contributions. Your limit is calculated as 18% of your previous year's earned income (up to $32,490 for 2025), plus any unused room from previous years, minus any pension adjustments.

Forgetting to Report All Income Sources

Your regular T4 income from your employer is straightforward. But the CRA expects you to report all income, and many Canadians overlook additional sources that don't come with official tax slips.

Common forgotten income includes:

Tips and gratuities
Rental income from Airbnb or a secondary property
Freelance or gig economy earnings
Income from streaming platforms
Profit from selling investments, such as any mutual funds, ETFs or stocks in a non-registered account (capital gains distribution)
Interest earned in non-registered accounts

The CRA has become increasingly sophisticated at cross-referencing income from digital platforms, banks, and brokerages. Unreported income doesn't go unnoticed. It triggers reassessments, interest charges, and in some cases, more serious penalties.

How to avoid it: Before you file, wait until mid-March to ensure you've received all your tax slips. Check your CRA My Account, where many slips are automatically uploaded. Keep records of any income that doesn't come with official documentation.

Missing Deductions and Credits You Qualify For

According to a 2025 survey by H&R Block Canada, 38% of Canadians believe they've missed tax credits or deductions they were entitled to claim. When the company reviews prior returns through their Second Look service, they find an average of nearly $3,000 in unclaimed benefits per person. With over 400 tax credits and deductions available in Canada, it's easy to overlook something.

Some commonly overlooked deductions and credits include:

Medical expenses not covered by provincial health plans or workplace benefits
Interest paid on government student loans
Moving expenses (if you relocated at least 40 km closer to work or school)
Home office expenses (if you work from home)
Professional membership dues
Childcare expenses
Charitable donations (even small amounts add up)

How to avoid it: Before filing, review the CRA's full list of deductions and credits. Consider whether any major life changes in the past year might qualify you for something new. A new baby, a job change, a move, or even starting a side business can all open up tax-saving opportunities.

Claiming Expenses You Can't Actually Deduct

The flip side of missing legitimate deductions is claiming expenses that aren't allowed. The CRA regularly flags returns with ineligible claims, which can lead to reassessments and delays.

Common mistakes include:

Claiming moving expenses that were already reimbursed by an employer
Claiming interest on a line of credit used for personal expenses (only interest on loans used for investing is deductible)
Claiming union dues that were already reimbursed
Claiming personal expenses under "other deductions"

How to avoid it: Keep documentation for every deduction you claim. If you're not certain whether something qualifies, look it up on the CRA website before filing. A few minutes of research can save you from a reassessment later.

Filing Late (Even When You Don't Owe Money)

The tax filing deadline for most Canadians is April 30, 2026. Self-employed individuals have until June 15, but any taxes owed are still due April 30.

If you file late and owe money, the penalty is 5% of your balance owing plus an additional 1% for every month you're late, up to a maximum of 12 months. Someone who owes $5,000 and files a year late could see their bill increase by around $850 in penalties alone.

But here's what many people don't realize: filing late can also affect your eligibility for government benefits. The Canada Child Benefit, GST/HST credit, and Climate Action Incentive payments are all tied to your tax return. If you don't file, you might not receive these payments.

How to avoid it: File on time, even if you can't pay the full amount owing. The CRA offers payment arrangements that allow you to pay your balance over time. Filing late and owing money is far more expensive than filing on time and setting up a payment plan.

Not Updating Personal Information with the CRA

This one seems minor, but it can have real consequences. If your address, marital status, or dependent information has changed and you haven't updated the CRA, you might miss benefit payments or receive incorrect amounts.

For example, if you got married or started living under common-law in 2025 but haven't updated your status, your GST/HST credit and other benefits may be calculated incorrectly. The CRA might later ask for repayment of benefits you weren't entitled to.

How to avoid it: Log into CRA My Account and verify that all your personal information is current before you file. Update any changes as they happen throughout the year.

Withdrawing From Your RRSP Without Understanding the Tax Impact

RRSP withdrawals are taxed as income in the year you receive them. While your financial institution will withhold a portion for taxes, this withholding is often not enough to cover your actual tax liability.

Withholding rates on RRSP withdrawals are:

10% on amounts up to $5,000
20% on amounts between $5,001 and $15,000
30% on amounts over $15,000

But if you're in a higher tax bracket, you could owe significantly more when you file your return. A withdrawal could even push you into a higher bracket, creating a larger tax bill than expected.

Equally important: when you withdraw from your RRSP (outside of the Home Buyers' Plan or Lifelong Learning Plan), you permanently lose that contribution room. You can never get it back.

How to avoid it: Before making an RRSP withdrawal, understand how it will affect your total income and tax bracket for the year. In many cases, accessing funds from a TFSA first makes more sense, since TFSA withdrawals are tax-free and the contribution room returns the following year.

How We Approach Tax Planning

Tax season shouldn't be a scramble. It should be the result of planning that happens throughout the year.

Our firm works with clients to build tax planning into their broader financial strategy. This includes coordinating RRSP and TFSA contributions, timing income and deductions strategically, and ensuring that withdrawals in retirement are structured to minimize your overall tax burden.

We believe tax planning is most effective when it's proactive rather than reactive. Our goal is to help you avoid surprises at tax time and keep more of what you've earned.

Take the Next Step

If you're filing your taxes and realizing there might be better ways to structure your finances, we're here to help. We work with clients in Stittsville, Kanata, and across the Ottawa region.

Author Bio

Andrew Tricomi, CFP, is a Financial Planner & Investment Representative at Andrew Tricomi Financial Planning, a fee-only, advice-only financial planning practice based in Stittsville, Ontario. A Carleton University graduate with a degree in Financial Economics, Andrew is the Vice President of the Stittsville Business Association and a member of both the Financial Planning Association of Canada (FPAC) and the Ottawa Estate Planning Council (OEPC). Andrew and his team specialize in retirement income planning, estate planning, tax planning, and wealth transfer for pre-retirees, retirees, and families across the Ottawa region.