In Canada, one of the most stressful times for many, is the annual rite of personal income tax season, during March and April. A major chunk of the stress comes from the question of whether or not you are missing out on some magic tax deduction that everybody else in the world knows about except you. And you are needlessly paying income taxes where you don’t need to.
So what to do? Do it Yourself…or Hire an Accountant?
It comes down to two things: The degree of complexity — or simplicity — of your own tax situation and how much of a DIY kind of person you are. Yes, what is important to you, Time or Money???
Doing it yourself
Believe it or not, some people actually like doing their own taxes. Is it a good idea? Perhaps, if you have a single source of income, a single employer, a few t-slips and no changes in your marital status nor capital transactions.
In this case, outsourcing the task to a third party may seem unnecessary. And you may be very interested in new changes to the taxation laws and like to keep up-to-date. This way, you can become very popular at cocktail parties and barbecues.
It is still possible for DIYers to obtain the proper forms from the Canada Revenue Agency and various provincial departments. But the ideal method is by using tax software.
There are excellent software programs that you can use. Among the most popular tax software programs are Ufile, TurboTax, H&R Block and StudioTax. All are quite user friendly and prompt you with questions that can assist you with certain complexities. They also give you planning tips in certain cases.
Additionally, there are some government organizations, community groups and educational institutions that offer to prepare tax returns free of charge for certain people who have modest incomes and are seniors, or students or immigrants.
You can also check out Service Canada or Canada Revenue Agency for Netfile:
or just Google ‘free income tax preparation Canada’. Press the ‘I Feel Lucky’ tab. You never know!
Hiring a Professional Accountant
Using a professional, allows the taxpayer the peace of mind knowing they are taking advantage of all the deductions and credits to which they are entitled. Note that the taxpayer is always largely responsible for their own income tax returns, regardless of whether they hire a professional to complete and file the return.
Not all accountants are created equal, with differing styles and approaches. Those designated as accountants are professionals with a background in accounting, with a bachelor’s degree and/or a graduate diploma. Some accountants work predominantly as tax preparers and may operate as a sole practitioner or work in a firm. These firms come in different sizes and may be national or local. In addition to accounting firms, there are also chains that offer tax preparation services, such as H&R Block.
Other services that your accountant can provide: electronic filing, follow up for government requests, tax and financial planning, bookkeeping services, preparation of GST/QST returns for your business and payroll services amongst other services.
There are a number of questions to be considered when deciding whether to outsource the preparation of your annual tax returns. Among these are a change in personal circumstances, such as divorce, marriage, the birth of a child or a death in the family. It could also involve a more complex situation, such as starting a business or acquiring an income property. That may require more specialized expertise since there are various options and specific rules that apply. Changes to existing tax rules may also be a good time to contemplate hiring a professional.
Money is also a factor. All of the above factors come with varying costs, which may be difficult to determine what you are getting in return. If you are expecting a refund, then speed of filing is also a consideration.
You need to be confident and establish a firm, trusting relationship before entrusting someone with any aspect of your finances so it’s wise to spend some time on it. Be organized and start as soon as possible. Don’t wait for the tax deadline.
April 9, 2019