Thinking about doing your own taxes?

Here are the pros and cons to consider

Ah, tax season. Before we’ve even had a chance to settle down from the holidays, we start getting pesky reminders about doing our taxes, again. If you are like many Canadians, you may wonder, each year, if you should prepare your own tax return. Is it really that hard? Is it worth the time and effort?

Of course, it is difficult to provide a definitive answer, as each taxpayer has a unique situation. Generally speaking, the more complex your financial situation, the more challenging it will be to prepare your own return. For example, if you have rental properties, relocated and changed employers, or many investment accounts, then your return is going to take more time and attention than if you simply have a single employer and RRSP contribution. On the other hand, if you do have a simple return, there are free software tools available that will get you started. You can even file your return by hand, on paper. Yes, a small percentage of Canadians still do that!

If you don’t have the confidence to prepare your own return, or the free apps are not sophisticated enough for your financial situation, you will need to decide how to get help. This may still be in the form of Do-It-Yourself (DIY) software, like TurboTax with additional paid features that are not available in free editions. Or, it might mean finding a tax preparation company like H&R Block, or even a traditional tax services firm, staffed by chartered accountants.

What are the pros and cons?

With paid versions of DIY software, you should have the tools necessary to account for a broad variety of tax situations. As long as you don’t have any really unique elements to your tax situation like foreign income, filing requirements in multiple jurisdictions, or assets that trigger special reporting requirements, chances are there is a paid version that will let you get the job done. Of course, the downsides are 1) you still have to understand the fundamentals of preparing a tax return, 2) you have to take full responsibility, yourself, for the proper preparation and filing of your return, and 3) you have to pay for the software. That last point can be frustrating at times, as you may be lured to a vendor’s website by a very low advertised price (or even the promise of free), only to find yourself being upsold to required features once you have already started preparing your return.

If you elect to find a tax preparation company or tax firm to help, you will have the benefit of a trained individual preparing your return on your behalf, as well as the company standing behind the accuracy of your return, provided that you have given them accurate information. This can save you a lot of effort and, at the same time, give you peace of mind. On the negative side, you will still be responsible for collecting all of the required documents (slips, expense statements, etc.) and figuring out how to get them to your tax firm. If the firm does not have a smooth digital process in place, you may even have to drop the documents off at their physical office. Also, you will undoubtedly be billed hourly, based on the complexity of your return, and you may not even know the cost until your return is filed and tax season is over. Nobody likes an invoice from their accountant to start the summer!

Here at Blackspark, our goal is to give you the best of both worlds. We think that everybody should be able to have a professional accountant prepare their tax return and at a fixed price. We built great technology to help you provide your tax information to us quickly and remotely. Then we prepare your return with licensed chartered accountants. If that sounds like a fit for you, consider working with us.