With the tax deadline fast approaching, we continue with the theme of filing your taxes. Last week we spoke about changes on the way in the 2016 federal budget. This week we’re going to answer a common question faced by taxpayers – should I do my own taxes or hire an accountant? Just like the decision of doing your own renovations or hiring a contractor, it’s not to be taken lightly. Let’s take a look at some things to consider.
Tax Filing Software May Fall Short
With the abundance of tax software out there, it can be easy to think DIY is the way to go, but it’s not always that simple. There are many ways to be penny wise, pound foolish – filing your taxes should not be one of them, as it can end up costing you dearly.
In our tax system, the onus is on you, the individual taxpayer, to file your taxes. You work hard for your money, so don’t you think it’s only fair to claim the tax credits and deductions you’re entitled to? But that’s often easier said than done. As we can see from this year’s federal budget, the tax system is constantly changing. For example, in 2015, you could contribute $10,000 to your Tax-Free Savings Account (TFSA), but in 2016, the contribution limit was reduced to $5,500. Ignorance is not an excuse – if you’re not up to speed, you could miss tax deductions or worse, own penalties and interest to Canada Revenue Agency (CRA).
How Complex Are Your Taxes?
Before deciding to do your own taxes, the first question to ask yourself is, how complex are your taxes? If you’re self-employed or own your own business, hiring an accountant to do your taxes is a no-brainer. The cost for a tax accountant often pays for itself – he can claim deductions you wouldn’t even think of. While tax software lets you file these claims, it can be confusing for taxpayers to figure out which expenses to claim and how to claim them. That’s where the expertise of an accountant comes in handy.
Just because you’re a salaried employee with a T4 slip, doesn’t mean you should automatically file your own taxes. Your tax situation may be more complicated than you think. Do you rent out part of your home to tenants? Then you’ll need to claim your rental income and file expenses. Again, this is where your accountant can come in handy. Your accountant knows the tax system like the back of his hand. He can help maximize your refund and minimize your taxes owing.
Has Your Tax Situation Changed?
If your financial situation has changed in the last year, this is another instance where hiring an accountant often makes sense. If you got married, divorced or bought a house, it’s important to keep up to speed on how this affects your tax situation. For example, if you got married, there may be new tax credits and deductions you can claim. An accountant can make sure you’re taking advantage of those.
The bottom line is hiring an accountant to do your taxes is money well spent. He can often help deliver a bigger refund than you could on your own. Do you need a hand in filing your taxes? Is your tax situation complex? Our planning programs now include free personal tax filing. Feel free to contact our office for a helping hand.
