Many people count down the days until their next birthday, or the next statutory holiday. Of course, I do that too — but at this time of year, I am always obsessed with the income tax filing deadline. I guess I come by it honestly. I remember watching my dad hunched over piles of curled and dog-eared papers in early spring (the deadline for most of us is generally the last day of April), sweating over his rough-draft pencil copy, and an inked and official “good copy” which he then sent off to Revenue Canada (as the CRA was then called) and waited for his refund cheque.
Since I got my first summer job at 16, I’ve been doing my own taxes. (I had an after-school job teaching kids’ gymnastics at 14, but I didn’t earn enough money to bother with a tax return.) I started with paper forms, like Dad, which I’d pick up at the post office. Call me a geek (and don’t be afraid of hurting my feelings, because I certainly call myself one!), but I found doing taxes …fun. Except for when I got to the end of the calculations and then, only then, realized that I’d messed up on my math and had to redo not only the main form, but, like three different Schedules.
Now, some folks hate doing their taxes so much that they pay an accountant or other professional tax preparer to do it for them. I totally get that, but I’m too cheap (and proudly independent) to pay someone else for a job I know I am darn well capable of doing myself.
Of course, the kids came along, and suddenly Matt and I would find ourselves scrambling to finish our paper returns at the last minute. Although you aren’t “in trouble” or on the hook for any penalties or interest payments unless you owe money, I still don’t like missing the deadline. When Bronwyn was about two, we started using tax preparation software and — no word of a lie — it changed our lives. Suddenly, a job that took the two of us at least two solid weekends suddenly took maybe two hours. The software calculated everything for us, and if we realized at the end of the process that we’d forgotten a T4 slip or a charitable donation, we could add that in and everything (yes, even those pesky Schedules) would get recalculated.
With the 2011 tax year filing deadline just over two months away, I’ve been wondering if anyone still does their own taxes on paper — and how much success they’re having with that. So I asked Richard McCann, senior project manager of Intuit Canada (they make TurboTax tax preparation software). Here’s our Q and A:
SANDRA: What are the top 5 mistakes parents make when doing their own taxes on paper?
RICHARD: Let’s start with a big one: mindset. Parents – and all Canadian taxpayers – should think of taxes as part of their family’s personal finance strategy. Personal taxes might be due on the last day in April, but the decisions you make on the other 364 days can dramatically affect your tax refund. Simply put, think about taxes the way you think about your finances. For example, you might plan a saving schedule to pay for your daughter’s participation in a hockey league. Extend that personal finance planning to ask yourself, “Is there a tax saving opportunity here?”
One of the biggest challenges parents face when doing their taxes on paper is overlooking tax credits. Very few Canadians know all the deductions that are available to them. That’s the beauty of tax software — every credit and deduction is built in. The best software uses an interview process, asking questions about your life and uncovering every relevant deduction.
Waiting until the last minute to file taxes is never prudent. Parents tend to have hectic schedules, filled with any number of activities from taking the kids to swimming lessons to Easter pageants. Focusing on taxes, especially when filing with paper, takes time and meticulous effort. If you wait until the last minute, you’re more likely to make mistakes.
Parents who file paper returns are missing out on getting their refunds faster. If you sign up for direct deposit and submit your return using NETFILE, you can get your refund in as little as two weeks. The earlier you file, the quicker your return arrives – most wait until the last second and become part of the logjam. Paper filing means you’ll have to rely on snail mail for your return to arrive at the CRA and for them to mail you a cheque. Net filing ensures any refund you receive finds its way into your wallet sooner.
Paper breeds paper, which often leads to disorganization. If you file with paper, you tend to be limited to paper slips all year long. Shift to electronic! For example, most charities now offer e-slips, which are easy to store in a folder on your computer. TurboTax will even import slips directly from some charities, epost, and investment companies, so you don’t even need to type in the numbers. When tax time comes, you’ll know where these receipts are, minimizing the risk of errors or paying more than owed.
SANDRA: When DIY paper tax-filers mess up their math, does that create problems ultimately? What kinds of problems? (For example, having to pay interest on tax they didn’t know they owed, and therefore didn’t pay by the filing deadline?)
RICHARD: One of the great things about tax software is that you don’t need to do your own math. All the calculations are taken care of, and data (such as unused RRSP contribution space) can be carried from one year to the next.
If the CRA catches an error, they’ll let you know about it, but it may delay getting your refund.
SANDRA: On average, how long does it take for a DIY tax preparer to complete a tax return on paper, versus with the help of tax prep software?
RICHARD: As you can imagine, the length of time will vary considerably, depending on the complexity of someone’s tax situation. The typical return uses 13 pages of paper, so using software can save a lot of trees!
Tax software reduces the time spent double-checking your math or second-guessing the data. TurboTax will guide you through the filing process and includes answers to frequently asked questions along the way. Data can be carried forward from one year to the next so you won’t have to enter the same information twice. And since electronic tax slips can be automatically imported into TurboTax, the need for data entry is basically eliminated. Your return is ready to file in just a few clicks! Finally, TurboTax guarantees accuracy so even if you’re not so great with numbers or data entry you can trust the software has done the job for you.
There is definitely another way to cut your time no matter how complex the return, and that’s with NETFILE. Electronically filing with the government is easy and secure, and is the absolute fastest way to get your refund. You can have your refund in your bank account in as little as eight business days after you click the NETFILE button in TurboTax. Compare that to four to six weeks for a paper return and the advantage is clear!
Now, I’m wondering: Are you a devout paper filer, or do you use tax preparation software? If it’s the latter, you’re going to like this: I’ve got some TurboTax software downloads to give away, right here! All you have to do to qualify is leave a comment letting me know what you hate most about filing your income tax return.
NOTE: Please ensure you are signed in before leaving a comment.
*This giveaway will close at 11:59pm ET on Monday, February 27, 2012.
To be awarded on a first come first served basis to those who answer the question, above, until inventory is depleted. Quantities are limited at the discretion of Rogers. You must be a Canadian resident, 18 years or older, excluding residents of Quebec. No cash value.
Looking for more great tax tips? Check out our guide to tax time!