Income taxes made easier with technology
I have these memories from my childhood of my Dad stuffing his and my mother’s coffee stained tax receipts into a ratty old shoebox and dropping the package off at my parents’ accountant’s house. Karl, the quirky accountant who was always three days overdue in bathing, would squirrel away in his basement for two weeks and emerge with my parents’ tax return that he’d filled out with a pencil.
My parents never complained of errors because Karl always did his work properly. But they had zero insight into why their tax return resulted in their refunds or statements of taxes owed over the years.
Fast-forward five years ... and yes, my parents, though now divorced, still used Karl and his pencil method until recently … and the opportunities for tax transparency have increased dramatically due to technology made available to every Canadian. Here’s how you can use technology to make filing your taxes easier and clearer.
Secure cloud services: I follow a two-step process with myself and my clients. As my tax forms start rolling in, such as my RRSP receipts or T5s, I firstly scan them if they are paper or download if they are digital and label them with a clear file name. Secondly, I load them up into a private folder in my Google Drive. Some people prefer alternative cloud services like Dropbox or Microsoft OneDrive to store their digitized records, and that’s fine, too. Just remember to ensure that wherever you store your records, there is ample digital security.
File the paper receipts away somewhere safe after you’ve digitized the records. You can be called upon by the Canada Revenue Agency (CRA) to view up to six years back of your tax records, so keep these files on-hand.
CRA My Account: The CRA has gone digital, so now you can see almost everything related to your tax situation on CRA My Account. There you will find your T-slips such as T4s or T5s and you will see your RRSP and TFSA contribution limits as well as be able to sign up for direct deposit or make address changes, like I just did. Personally, I love to check previous returns to see how my income is growing.
Use CRA My Account to keep yourself organized. Check on the tax slips that have been filed under your SIN number, in case you missed one. Once you’ve filed, you’ll received digital notification when your Notice of Assessment (NOA) is ready for you to view. This is the document that tells you how much you’re getting back or owe. I recommend downloading your NOA and adding it to your secure cloud folder.
DIY software: If you don’t have multiple sources of income (i.e. rental properties), are a business owner or have a major life event happening like death, divorce or marriage, you can probably file your own taxes using affordable software like SimpleTax or TurboTax. And, if you need help, there are free tax clinics offered across most metropolitan areas in Canada for low-income households. Wherever you go for your software or services, you’ll need to check that the company is NETFILE certified, meaning they can file your return digitally with the CRA.
Using technology has another positive side effect; awareness. Knowing how much you made, and the credits and exemptions you qualify for, will allow you to get a better picture of where you stand financially. You’ll even get ideas about what you could improve for next year. Whatever you do, don’t forget to file on-time by April 30.
Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star. Follow her on Twitter: @lesleyscorgie