6 SIMPLE WAYS TO DO YOUR OWN TAXES (CANADA)
Updated: Nov 10, 2021
Knowledge is power, and having the knowledge and skill to do your own taxes can put you back in control of your finances. In today’s economy, it’s a crucial life skill to understand the fundamentals in preparing and submitting your own tax return, and one thing is for certain, there is no one as interested in your financials as you are! Below are six simple ways you can get ahead and start getting more out of your tax return.
1. Set Up Canada Revenue Agency (CRA) Account
Setting up a CRA account will give you access to all the information you need to streamline the process of filing your taxes. By setting up your CRA account, you will have access to documents from previous or current employers that will be required for your tax return. The account will also be your primary and most efficient mode of communication with CRA which may be required in the future, so it’s handy to set up from the get go. The request to set up the account is quick, go to CRA my account step two and register. You will need your SIN and your last tax return for security questions. Once you submit your request, CRA will send you a code within a few weeks. Once you receive the code, enter it in to get access to your account and you are ready to go!
2. Get a Good Tax Software
Our preference is UFile which is developed by Thomson Reuters, it’s fairly priced, sophisticated and easy to use. If you decide to use this tax software, it will be important to answer the setup questions correctly as the answers you input streamline the relevant forms required for your tax return. The UFile software can also be linked to your CRA account which makes the process a lot easier as information can be auto-filled from your CRA account into your tax return file. Before you submit your tax return as an e-file using the software, make sure to double check all the information within your forms so you know you haven’t missed any extra zeros!
3. How Do I Know if I Did it Correctly?
The best benchmark is your prior year tax return. If the current year return does not have an amount that was present last year, you may have missed something. If you choose to use a tax software, there will be a comparison analysis built into the software that will help you understand if you have made any errors in your current tax return.
4. After Hitting Submit on Your Tax Return
Once you submit the tax return you have prepared you will get a confirmation code and an instant Notice of Assessment (NOA) draft. Keep these for your records along with a PDF copy of your tax return for reference. Within a few weeks you will receive an official Notice of Assessment in your CRA account and the results of your tax return, either in the form of a refund or amount payable. Congratulations, by this stage, you should have completed your own tax return!
5. How to Fix a Previous Year’s Tax Return
CRA has made this pretty simple for us! In your CRA account there is an option to edit a prior year’s tax return online. Select the year and look up the line items you want to edit. The line items will have a before and after column, enter the revised amounts in the after column, then submit. Retain all supporting documentation as the likelihood of audit is high if you submit an adjustment. It can be a good idea to get a second opinion on a previous year's tax return to ensure you maximize your tax credits/deductions. This can be an opportunity to gain more back from your tax return!
6. Getting Audited
Getting audited is a regular part of the tax system and should not be feared. If you are audited, simply upload the requested documentation to the CRA site for their review. If you fail to produce the documentation you may be able to provide alternative forms of support or provide your explanation.
Getting ahead of your taxes can help you maximize your deductions, tax credits and dollars saved. Understanding the basics and investing in a good tax software can help you feel like you are back in control of your finances and this can help you plan efficiently for your financial future. The first time you decide to do your own taxes can be a little confusing, so it’s a good idea to get a professional to review your documents. This can help you gain confidence in your abilities, your independence and set a solid benchmark for filing your own tax returns in the future. If you are interested in getting personalized advice, sign up with Fisherman Financial today for a free consultation.