Even The Simpsons worried about their taxes. In a memorable scene, it’s tax day in Springfield, and Homer thinks he’s exempt from the long line at the post office. Except he hasn’t completed the new year’s tax return at all and makes up details about his family in a rush to complete and mail his forms, minutes before midnight.
Luckily, there are a variety of services that can help you manage the process and avoid Homer’s situation.
Hiring an accountant can be a great strategy at tax time, especially if you are self-employed, have a large variety of investments, assets and expenses, or simply prefer the expertise of a professional to help increase accuracy, avoid fines, errors or reduce your likelihood of being audited.
Other filers than can benefit from the expertise of an accountant include couples with dependents, business owners, someone who received an inheritance, or someone who experienced a major life change, such as a divorce or death of a spouse.
While the cost of hiring an accountant is often the largest deterrent for many filers, tax professionals have access to more thorough software than consumer tax products. They can provide advice before, during and after the tax-filing process, help identify additional tax credits and deductibles, as well as provide detailed and organized documentation in case the Canada Revenue Agency requests an audit. If you’re self-employed or earned rental income, the cost of hiring an accountant is also an eligible business deduction.
If your tax situation is simpler and more routine, there are also free online services and fee-based tax preparation software.
The Canada Revenue Agency has seven different certified products (TK) for their NETFILE program, its electronic tax-filing web service that allows users to send their individual income tax and benefit return directly to the government agency. The secure and confidential process results in faster returns, increases accuracy, you don’t have to send in receipts, and gives immediate confirmation the agency has received your return, saving you a trip to the mailbox or post office.
Several software programs make filling out your tax return similar to the process of filling out an online survey, going step-by-step through each section. These can be affordable, time-saving options for most filers, especially if you are single, do not own a business, aren’t self-employed and have already collected your tax documents, donation slips and other information about your income.
However, even at the most expensive levels for these tax software programs, filers with complicated finances or uncertainty about amounts like capital gains or how much to deduct for their home office expenses, risk uncertainty about the accuracy of their information.
It’s also important to consider whether choosing online software over the services of a tax professional may result in much more time spent completing your return.
Whichever method you choose, starting the process of filing your taxes earlier allows you additional time to collect the important documents you need, as well as address any questions you may have well before the deadline. This reduces your likelihood of errors and helps you learn what you need to pay, or receive back, faster.
Have any additional tax tips? Let us know in the comments.