There are plenty of reasons to do your own tax return…after all, there is a good tax software easily available. Doing it yourself saves some money and gives you a better perspective on your finances. But there are downsides too and, in my view, it depends on your personal situation and circumstances.
Most consider their returns “pretty straightforward”. If you just have a few slips and deductions, that may well be the case. But if you’re uncomfortable about missing something, consider your skills, time, availability, and patience for the job. Be prepared to invest some time and effort. There are several good tax programs that can help you through the process. However, you cannot rely completely on software…it is only as good as the input.
Much of your tax information is available on-line; and downloading slips and other info can be helpful. But be aware that info becomes available at various times during the tax season, and you can easily miss a slip if you download information too early. You can even include a slip twice if you do multiple downloads.
If you do pension-splitting with a partner, the software programs manage this reasonably well. However, there are many opportunities to split income, expenses, deductions and/or credits between partners. Are you aware of all of these?
For example, it does not matter whose name and SIN is on an investment slip. If you both contributed to the purchase of an investment, you should be able to justify splitting the investment income.
Either partner may also claim the credits for medical and/or donations but be aware that the CRA is particularly vigilant in following up on these. They may contact you for donation or medical receipts several months after filing. Can you deal with this in the summer or fall?
Do you or a family member have an impairment or disability? Is that person in a care facility or nursing home? There is some paperwork to go through to get the disability credit, but it may mean the taxpayer can claim a portion (or even all) of the facility expenses as medical.
In the case of self-employment or rental income, what expenses can you deduct? Claiming depreciation (or CCA in tax terms) is subject to specific rules. Recording a big loss can often attract CRA attention. There may also be GST issues.
And of course, changing and/or correcting a previously filed return is difficult and time-consuming. It is much easier to do the return right the first time.
If you are comfortable dealing with all the above, you can probably put together a tax return reasonably accurately. However, there is another consideration. Do you have a backup plan if you are not available next year? Will someone be able to follow and continue your work? If there is a crisis, it may not be the best time to seek out a good accountant.
These are just some questions to ask yourself before taking on the job.
Author David A. Townsend CPA, CA
SG LLP Chartered Professional Accountants