We’re right in the middle of tax season, and while some keeners have already filed, Canadian taxpayers have until May 2nd to submit their personal taxes for 2015. The deadline to file taxes for those who are self-employed is June 15th.
There aren’t very many strategies for individuals to save on taxes these days and so most tax planning is fairly straightforward. That’s why for many years I filed my taxes using basic tax preparation software.
My tax situation wasn’t complicated. Just a standard T4, plus my RRSP contribution, a bit of student loan interest to deduct, and maybe some tuition credits when I was going to school.
It was no big deal filing taxes on my own – and it got even easier (and cheaper) as the software became more sophisticated. In fact, tax preparers like H&R Block started offering free software last year and will continue to do so this year online or by download at hrblock.ca.
More Money, More (tax) Problems
But as I started earning extra money through my online business it became clear that I needed some expert guidance to figure out whether it made sense to incorporate my business. I also wanted to make sure that I was maximizing all applicable expenses against my online income – from home office to marketing.
I met with an accountant, set up a corporation for my online business, and structured the business in a way so that we use discretionary common shares to stream dividends to my stay-at-home wife.
A process that may have cost us $1,500 – $2,000 to initially set-up now saves our household at least $5,000 in taxes each year.
Now unless you are self-employed or rely on commission income, rental income, or significant investment income, an accountant will be somewhat limited in the planning they can do for you. The fee just might not be worthwhile, especially on an ongoing basis.
A tax preparation office might be a good sweet spot to consider for additional guidance and advice about your taxes at a reasonable price that you can afford each year.
H&R Block has been around for more than 50 years and has 1,200 offices across Canada. You can file in-store starting at $69.99, or more depending on your personal tax situation. After an interview you’ll get a free quote based on the complexity of your return.
Canadians who use H&R Block to file their taxes are backed by something called the Maximum Refund Guarantee, a promise H&R Block tax experts look for every deduction and credit so you can get your maximum refund.
Filing Taxes: From DIY to Pro
I reached out to Caroline Battista from H&R Block and asked about when a client might want (or need) to “graduate” from free basic DIY tax planning software to needing some professional guidance.
“The great thing about our tax software is that they are Canada’s only truly free products designed for everyone, regardless of the complexity of their situation,” said Battista.
She says this can apply to students, who may have a straightforward return, young families whose life situations are getting more complex, retirees who are becoming more and more comfortable in the online world, and small business owners who are keen to manage their own tax filing.
“H&R Block’s Tax Software are not free up until a point or free until you file a certain number of returns. They are 100% free guaranteed.”
Battista goes on to say that a person may seek assistance based on their own comfort level with filing and managing their returns.
“An example of this would be Pro Review, which gives customers a one-on-one consultation with one of our tax experts to optimize their return before they file.”
When considering my own tax situation I’ve found that as my business income and dividend withdrawals become more predictable from year-to-year it might not be worthwhile to continue using an accountant to file my personal and business taxes.
Perhaps it makes more sense, now that the corporation set-up is behind me, to file my own taxes again using free online software and then use something like H&R Block’s Pro Review for a second opinion.