5 things your tax software isn’t telling you

Planning to file your taxes using DIY tax software? Here are five things to know before you start.

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From the April 2014 issue of the magazine.

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(Corbis)

(Corbis)

1. You don’t have to pay for software. The CRA lists more than 25 free programs that are certified to work with its electronic tax transmission service, NETFILE. Vancouver-based personal finance blogger Krystal Yee says these free versions have the same functionality as software kits that run from $30 to $100, depending on their sophistication. “I just use the web versions,” says Yee, who has spent five years testing a variety of tax-filing tools. Just bear in mind that your personal information may be encrypted and temporarily stored in the cloud by doing so.

2. You may be better off with an accountant. If you own a business or rental property or have offshore investments, hiring an accountant may set you back several hundred dollars but you’re less likely to miss out on important credits and deductions.

3. Don’t know your cost basis? Neither do we. Basic tax software won’t calculate your cost basis, the amount of gain or loss when you sell an asset. It’s not always an easy calculation either, since it includes commissions in the case of stock purchases. (Visit Dan Bortolotti’s Canadian Couch Potato blog at moneysense.ca/acbtracking for instructions.)

4. Mistakes aren’t my problem. You can’t use your at-home software or NETFILE to change your tax return or apply for a credit you might have missed once it’s submitted to the CRA. For that you’ll have to wait for your Notice of Assessment. Once you’ve received it, you can select one of the “Change my return” options provided.

5. See you again next year. Unfortunately, you’ll have to pay up every year for the latest software since tax laws aren’t static. This year, for example, the rules for claiming disability amounts and amounts for infirm dependents have changed. And while you can purchase back editions to help prepare filings for prior years, you can’t file those returns online via NETFILE.

One comment on “5 things your tax software isn’t telling you

  1. The online free tax software is made only if you have less than $20,000 or $25,000 with TurboTax. I would rather buying a tax software. It is true that tax laws change every year, therefore it is very important to stay fresh with the news every year. As per tax accountant, make sure they know what they do, and it is very important to read the notice of assessment when you have it. I still see today a woman working a tax preparer who has got the nerves to call herself tax preparer, when she does not know that with RRSP contribution, we have to enter the RRSP deduction limit and see if the client has got a Home Buyer amount to repay every year, because it is not repay, the minimum payment is added to the total income as RRSP income. The client could end up having to pay a balance to Canada Revenue. Her name, pretending to be tax preparer, is Elsa. Her boss is very nice to have her on board. She never took one course about tax return, and would rather have her note book at her desk, notes for tax returns. Not my job to teach her income tax returns.

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