5 TIPS AND TRICKS FOR FILING YOUR OWN TAX RETURN FOR THE FIRST TIME

Travis Waite, WRLA

It’s time for another round of Dollars & Sense. Before I get into it, I want to thank everyone who attended and participated in the 2023 WRLA Building & Hardware Showcase. The feedback I received from members at the show was overwhelmingly positive and it was a great week connecting with staff, board members, exhibitors, and retailers. Your support allows us to continue to fund programs that help drive our industry forward.

With tax time just around the corner, it’s a good time to share pointers for individuals who are filing their own taxes for the first time. According to a recent survey, about 50% of Canadians pay a tax professional to file their taxes, with another 25% using family or friends to file.

When I was in high school, I was never taught how to file my own taxes or even balance a budget. I firmly believe that it is a disservice not to teach more of these life skills in school. Learning to file my tax return has served me much better in life than learning the formula to calculate the cosine of a right triangle, but I digress.

Even after I graduated with an accounting diploma in 2012, I relied on paying a tax professional my hardearned money to file my return until 2018, which likely took all of 15 minutes for the preparer to carry my prior year’s information forward and plug in my T4. It was no coincidence that was the same year I began working in the corporate tax department at PricewaterhouseCoopers and got to see first-hand just how simple it could be to do it on my own.

This is not to say that everyone should do their own taxes. Many people rely on professionals to file their taxes (and rightfully so) for a variety of reasons, including the complexity of their returns, the value of the time saved or the tax planning advice that they receive to maximize their returns. Often, the value of relying on a professional will outweigh the cost of the service.

HERE ARE 5 TIPS FOR THOSE WHO WANT TO FILE ON THEIR OWN THIS YEAR:

1 Find A Tax Software

The evolution and popularization of computers have made filing taxes far easier. If you look at your past tax returns that were prepared by someone else, you may feel overwhelmed by the complexity of the return. Rest assured; your hired tax professional did not have to plug in every line item on the return. Rather, they use one of a variety of different tax software that are available to auto-populate the standardized information. This leaves you to fill in specific personal information and your tax slips. The software will then perform calculations and fill in the blanks.

My personal go-to software is Wealthsimple Taxes. They offer a user-friendly interface to collect information and even ask questions and provide search boxes to help find the forms that are applicable to your tax return. The optimization feature helps to flag potential unused credits you may qualify for, and if you are filing with your spouse, it will shift credits and deductions that can be split to increase your return or decrease your tax obligation.

You can also manipulate the data (such as adding a higher RRSP contribution), to see how it will affect your return. Best of all, this software is completely free to use, doesn’t need to be downloaded, and you can e-file right from your computer.

2 Get Access To Your Cra Online Account

This is something that I recommend everybody do, whether you file your own taxes or not. The process to do so is not too cumbersome and you will find a lot of important information on your account such as your tax slips, your TFSA and RRSP contribution room, any balances owing or credits that you will receive during the year, and correspondences from the CRA like your notice of assessments.

Having access to this information makes filing much easier, as most of the information that you will need to input on your return is right there on your account.

3 Use Your Previous Year Return As Starting Point

Once you have chosen your tax software to use, you may be stumped on where to collect all the information it asks for. Using your prior year return is a great place to start. You can copy over personal information that you may not have memorized, such as your SIN, and see which tax slips were used on your return.

Once you have done one year of taxes on your own, it becomes even easier to roll forward that information on the tax software you use so that it auto populates on your return and all you have left to do is to enter your tax slips.

4 Familiarize Yourself With Deductions

As mentioned above, you don’t need to be a tax professional to file your personal return. It is helpful however, to have a basic understanding of some of the deductions or credits that you may be eligible for. Tax rules are constantly evolving, so it is good to review what new rules have come into effect for the current year to make sure you are maximizing your deductions and credits.

5 Keep Track Of Important Dates

It is good practice to be aware of important dates and deadlines when filing your taxes. Filing late can result in penalties and interest and can delay receiving any benefits or incentives that you are eligible for. The CRA relies on the information from your return to calculate many of these incentives. There are also other deadlines, such as RRSP contribution cut-offs that are important to be aware of.

Remember, the filing deadline this year is May 1. Also, the deadline for self-employed individuals and their spouses is June 15.