If you’re like most Canadians sitting down to file your tax return this year, you will likely be using tax software on your home computer or using an online-based service via your mobile device to put everything together and send it off to the Canada Revenue Agency. Filing online is more than just a trend in Canada: it’s a practice that’s expanding every year.
In 2014, the CRA processed 28 million income tax returns for individuals, and of those returns, about 82 per cent of all, filed their paperwork electronically through the Canada Revenue Agency’s Netfile system. That figure is up just a bit from 82 per cent in 2015. Some of those electronic forms come through tax professionals, but do-it-yourself tax software is easy to use for individuals. Again, the starting point is understanding how easy it is to use tax software, especially if you have your paperwork in order. (e.g. T4 slips and other financial forms)
1. Desktop-based products: (for Windows and Mac users): 19 different programs are certified
2. Online-based products: 11 different web-based sites which are certified
3. Mobile-based products: 6 different mobile apps that are certified
All of these products mentioned are deemed Netfile compliant, meaning that once you select the software and enter all your information, you can file your tax return directly to the Canada Revenue Agency. Being Netfile compliant is key if you are thinking about purchasing or using any tax program.
Because most tax software is user-friendly and prompts you step-by-step with questions that tend to be yes or no it would therefore mitigate the risk someone will end up doing something wrong if you decide to file yourself.
Also, when you file your taxes electronically, you are creating a permanent electronic record for your use in the future. If a question comes up about your tax return, changes are you would be able to find it faster instead of digging through filing cabinets or giant stacks of paper.
Not only that but most people find that filing their taxes electronically gives them the chance to take advantage of more tax credits and tax deductions. Many tax preparation programs will help you file your return and inform you about potential tax benefits you’re eligible for. In turn, you may receive a larger tax refund or end up owing less money.
Finally, it is faster to file electronically which equals a faster refund with many having the option of direct depositing the return right into your bank account.
Some software is free, or free with restrictions. Free software is usually very basic and lets taxpayers file their own information without any phone or online support.
While basic, free software packages will work for most people, you may need to pay for more deluxe versions if your taxes are more involved. Deluxe paid versions of software will come in handy if you have things like rental property or a lot of investment income.
A lot of the products have a basic product for basic returns, then a standard product and a premium product. Which is right for you will depend on how sophisticated your tax needs are. It’s not a one-size-fits-all scenario. There are four of five different tiers of service. It goes up based on your needs and how many returns you are processing.
Whatever option you use, make sure you know your data is secure. Depending on the program, website, or app that you use, your personal data may be stored off-site with a third party or it may be stored on your computer or device locally. I’d go to the website of the particular software provider and see how secure it is since you’re trusting a third party to keep your confidential information.
A common consensus among financial advisers is that anyone using tax software can avoid a lot of headaches by relying on tried and true names. TurboTax, StudioTax, H&R Block, UFile and SimpleTax would be some reliable software options.
Also, stick with the brand you know and trust and if you stick with one of the more popular tax providers, you’re sticking with a company that has been around for a while potentially having less bugs, more security, and less risk of limitations.
STAPLES: How to Choose the Right Tax Software