With tax season in full swing, we can feel the anxiety and confusion in the air.
If waiting for tax receipts to appear in mailboxes wasn’t bad enough, there’s the looming question of how much your refund will be – or if you’ll, gulp, owe money! Once you finally have everything you need, you have to decide how you’re going to file your personal income taxes. There are three different options to choose from, all with their own lists of pros and cons.
To help you decide, we’ve broken it down here:
1. Hire a tax professional
If you’ve recently started your own business, gone through a major financial milestone (like gotten married or had a baby) or simply need help getting your finances organized, you may want to consider hiring a professional. Tax specialists can help you find ways to save on your taxes while making sure you’re claiming everything you need to so you don’t make any mistakes (that the Canada Revenue Agency will definitely find for you!). They’ll also remember to include things like any interest income you’ve earned from GICs not held in registered plans, or non-RRSP or non-TFSA high-interest savings accounts, which are details that tax software could miss. When looking for a professional, a CA (chartered accountant) or CPA (certified professional accountant) is your best bet, as their businesses are regulated.
Pros: You get the help of an expert and you get an extra set of eyes on the numbers. They’ll help you find tax deductions, teach you about changing tax laws, give you advice throughout the year, and can become an advocate for your financial well-being.
Cons: It’s a little more expensive (you’ll typically pay $200 to $400), and it’ll take time for you to prepare some files you can pass off to them.
2. Use tax software
If you’re not quite ready to pay for someone’s help yet, the next best option is to use tax software. With online software, you enter all the information yourself, and can see how each number you enter affects your return. Tax software is a great option if your tax situation is simple (you only had one or two jobs and you just have education tax receipts), if you don’t own property, and if you prefer to do things yourself. The three most popular options in Canada are: H&R Block, TurboTax and UFile. (With H&R Block, you can also opt to go into one of its locations to file, but it’s more expensive than using its online software.)
Pros: It can be free or very inexpensive (typically $15 to $25), takes very little time, and you’ll know all the details about your personal income taxes.
Cons: You may miss out on extra credits or deductions that a professional could’ve helped you find.
3. Do it by hand
Finally, if it’s your first time filing, you may want to consider doing things the old fashioned way: filling out the papers and mailing them in. Again, this is a good option for you if your tax situation is simple and/or if you are a numbers person. It’s also a good exercise in learning about taxes. You can pick up tax packages from post offices around the country (grab a couple, in case you make mistakes!).
Pros: It’s free (yes, free!) and you’ll know all the details about your personal income taxes.
Cons: You could make a mistake and may miss out on extra credits or deductions that a professional could’ve helped you find.
No matter which option you choose, tax deadlines are fast approaching. You need to file by April 30, 2016. And, if you owe money (unlikely when you’re a student), you must pay it by April 30 or you’ll be forced to pay interest.