DIY Taxes

Trent Ernst, Editor


Back when I was just starting out on this whole “productive member of society” thing, I decided I was going to do my first ever tax return myself. By hand. Using the provided workbook that I picked up at the local post office.

It was a bit optimistic. I knew very little about finances, and had never done anything like this before. I didn’t even know what a T3 was. (Wait, isn’t that Tylenol with Codine?) But I had only spent the summer working and the rest of the year going to college, so it wasn’t like I had a lot of money kicking around. I didn’t have a student loan, deciding instead to use the money I made working over the summer to pay for my schooling. Plus, I had a bank account that I had saved up some money, maybe $800, that was earmarked for my education, which doesn’t sound like a lot, but it mostly paid for one whole semester at school. (No, I didn’t get to school in a horse and buggy, thank you very much.)

Because I was in school (I was a college student now), I figured I should be able to puzzle my way through this whole thing. It wasn’t that complicated. All I needed to do was take the information from this box on my T-1000 (no, that’s the liquid metal dude from Terminator 2), and add it to line 26 on this tax form.

So I gathered together all my various slips of paper and set about doing my taxes. It took a while, but I finally got through it, and, to my pleasant surprise, I was due an $800 refund. There are benefits to being a starving student, after all.

I popped my return into an envelope and sent it off to the government, with dreams of what that money could do for me. I could pay for another semester of college. I could buy myself a set of drums. I could maybe buy myself an old beater of a vehicle, as I was going to school in Saskatchewan and living in Tumbler Ridge at the time.

So imagine my delight and surprise when my tax return, um, returned. I tore open the envelope and…

What the heck?

Instead of a cheque, there was a note saying I owed $400. Something wasn’t right here.

I poured over the enclosed documents, and discovered, much to my chagrin, that I had forgot to carry a two, which resulted, once everything shook out, in a $1200 error on my part. Ouch!

You would think such an experience would sour me to the prospect of doing my own taxes, and it did, for a few years. But recently I’ve started doing my own taxes again, or, to be fair, me and my wife are doing our taxes together.

The big reason we’re doing our own taxes is that the tools to do our own taxes have become much more user-friendly and widely available over the last decade or so.

You no longer have to do the math by hand. Instead, there are a variety of tax programs that you can buy that will do the math for you. The most popular tax program in Canada is TurboTax, which is available online or as a box from Software Emporium.

Other software can be downloaded from the company. There’s even a growing market for “cloud based solutions”, which is just a fancy way of saying that you can do your taxes online. And the online solutions often allow you to prepare a simple tax return for free.

But, as they say, you get what you pay for, so buyer beware when using an online program. While the actual software might be certified by the CRA (see sidebar), it might be harder to use. Or they might sell your information to advertisers in exchange for allowing you access to the software. The CRA doesn’t check these things; all they do is look at the math.

Users of Intuit’sTurboTax, for instance, can file for free if they have no kids and no significant assets. Most people will wind up spending $17.99 for the online version or $39.99 for the box version.

If you have rental or investment income to report, the price goes up to $32.99 online and $69.99 in a box. Small business owners will be paying $44.99 online or $99.99 in a box for the Home and Business version. (Note that the box versions only run on Windows-based machines.

If your don’t have kids or a computer, but you do have an iPhone, you can download Intuit’s SnapTax for $9.99.

While Intuit is the biggest game in town, it’s not the only one. In the past few years, UFile has become quite popular. You can buy the Windows-based software for $19.99, and prepare four returns. If your needs are greater, you can spend $39.99 and file up to a dozen returns. The online version costs $15.95 and is free for people with income under $20,000, first-time filers and students.

H&R Block has historically offered in-person tax preparation, but has moved into the DIY space as well. It’s free for the first return you file, and $9.95 for returns after that up to ten. Beyond ten, you’ll be paying $14.95 until you hit the CRA-imposed limit of 20 returns.

A recent entry into the online space is SimpleTax, which is free for everyone, because the creators believe “You shouldn’t have to pay to do your taxes.” You don’t even have to set up an account to file your taxes. That’s a double-edged sword, though, as you are not able to bring forward last year’s taxes, or even look at them. If you create an account, you can save your information like any other web-based tax option. It is one of the most elegant-looking options, but lacks the power of a TurboTax.

Those are the main competitors in the space. There are other options, like GenuTax, StudioTax, TaxFreeway, MyTaxExpress and FutureTax.

Which one is best for you? Unfortunately, there’s no easy answer. If your taxes are more complex, going for TurboTax or UFile is always a safe option. If your taxes are fairly simple and you don’t need the program to hold your hand to navigate, using the question and answer format, you may decide to investigate one of the other programs. Do note that many of the smaller programs don’t offer taxes for Quebec residents, which is probably not an issue for most, but…

When push comes to shove, the best option for you is the one that you use. If you dread the thought of doing your taxes, then maybe your best option is to get your taxes done by a professional. Because, while it might seem cheaper to do it yourself, it’s more important that they get done, rather than get done cheaply.