File Your Taxes Online Wth These Software Options
Tax season is just around the corner. How will you prepare your tax return? Some people like to hire a tax professional to handle their returns. But most Canadians are now preparing their own taxes with the help of software.
If you just can’t wait to get that big refund, know that the Canada Revenue Agency (CRA) will start accepting electronic returns on Feb. 24.
Most people want to get an early start because they expect to get money back. Just make sure you’ve received all of your tax slips. The due date for sending them out is March 2 so you might not receive them until mid-March.
Related: Preparing for Tax Season
Tax return software vs paid professional
You’ll be better off hiring a tax professional if your tax return is complicated – you run a sizable business, have several rental properties or investments outside of Canada. Also, if you are not familiar with the tax system you may overlook tax credits and deductions you may be entitled to.
If your return is relatively straightforward, however, you will save quite a bit if you do it yourself. Filing online is easy and efficient and, with the tax return software available in Canada, safe and secure.
Choosing the right tax software
It’s never been easier to file taxes yourself. There is quite a variety of tax return software to choose from and many of them are free.
Here’s a list of the most popular:
- Turbo Tax offers both free and several tiers of paid versions. The free version has no income limits but if you are a previous user and want to transfer your tax information from last year, you’ll have to purchase the paid version. You can start for free then upgrade to a paid version with full guidance if you feel you need it and then pay when you file (prices from $19.99 for Standard). After answering questions, you just complete the sections relevant to you. They have a maximum refund and 100% accuracy guarantee.
- SimpleTax. Despite its name, Simple Tax can handle more complicated tax situations including self-employment. It’s very user friendly with step-by-step guidance. Your entire return is on just one page. You can NETFILE up to 20 tax returns for free and also ReFILE if you need to make adjustments to your return. Everything you transmit is encrypted
- StudioTax also accommodates self-employment and those with rental income. The Quick Start Wizard prompts you to enter information step by step. If you have used them in previous years you can import your tax information which helps you save time. You can file up to 20 tax returns. It uses desktop software that you download, which some people prefer if they don’t want to enter their tax info online.
- GenuTax walks you through the tax forms with an easy-to-understand interview. It can process most tax situations and you can go back as far as 2008 if you need to file a previous year’s tax return. The program is only available as an installation file on Windows and is not available for Mac or mobile users.
- CloudTax offers a free and paid service. With the free service you get unlimited chat support, encryption to secure your data and online tax return storage. You can get optional audit protection for $2.99 a month. CloudTax is currently not available to residents of Quebec, Yukon, the Northwest Territories or Nunavut.
- AdvTax is not a pretty website but it can handle most tax situations. Once you complete the return you upload the PDF file to the CRA NETFILE. It supports Quebec tax returns and English, French and Chinese languages. The site claims it only takes 3 – 10 minutes to complete a simple return.
- UFileFREE is for post-secondary students, low-income families (with a combined household income under $20,000), people who receive the Guaranteed Income Supplement or whose only income is from T4 slips, and those who are filing a tax return for the first time. The Windows only version requires you to download and install the program on your computer.
- TaxTron free version is for those with household incomes under $31,000, seniors or full-time students. Otherwise a license must be purchased to activate the software. Pricing starts at $12.95.
- EachTax is relatively cheap at $6.99 for the first tax return filed and $3.99 for each subsequent return. It is free for new customers, individuals who are new to Canada, those who are 70 years old or older and people who earn $25,000 or less in annual income.
- H&R Block allows you to file your income tax return for free from February 1 – April 30. If you have questions you can look at a long list of FAQs. You can purchase several add-ons like a pro review, online storage, or audit protection.
In addition to the above software programs, the CRA now offers a “File My Return” service for lower-income Canadians who can file their income tax return for free. Individuals who qualify for this service receive an invitation letter in February with instructions on how to proceed. For further information call CRA at 1-800-959-8281.
There are also free tax clinics that will assist Canadians with simple tax situations and modest incomes – under $35,000 a year for singles, and under $50,000 for a family. They are staffed by volunteers who will help you complete your return.
Features you should look for
Consider these key features when deciding on your tax software:
- Easy to use. Unless you’re familiar with the paper forms it helps if the software comes with a program wizard that asks question to help guide you through it.
- Auto-Fill My Return compatibility which imports your data directly from the CRA.
- Compatible with your computer. This is not a problem if you use Windows, but Mac users may have less selection.
- Supports other languages or Quebec returns if that’s applicable to you.
- NETFILE certified by the CRA. The tax return is sent directly to the CRA safely and securely from your PC. Chances are good that it is. You can check here to be sure.
- Cost. Some offer pricing tiers which usually includes a free version. If you are a salaried employee or have pension and investment income the free versions are all you need because your return will be pretty straightforward.
- Security. Online tax return software handles sensitive personal information and the CRA doesn’t verify the security of the websites it certifies, so it’s up to you to make sure it’s up to snuff.
What’s the catch with free?
There is no catch. Typically the free versions can handle most situations and they are simple and fast.
However, customer phone support is only available with paid versions. Free just gives you email, chat or online information if you encounter any problems.
They don’t include audit protection, and some have income limitations.
Other services have an added cost and some programs are not shy about upselling you. Some, like SimpleTax, have a pay-what-you-want structure. You might want to donate something to help support the developers, although according to SimpleTax, the majority of their users don’t.
Generally, I would say start with the free version, and upgrade if it’s required.
Benefits of filing online
The benefits of filing your taxes online instead of completing the paper forms and mailing to CRA are:
- Faster Refunds – often in as few as 8 business days.
- User-friendly – software guides you through the process so you don’t need to be a tax expert to file your own return.
- Less expensive – compared to the cost of an accountant or tax preparer.
- Improved accuracy – NETFILE-certified software can use the Auto-Fill service which automatically fills in your tax information. The software automatically does the calculations and most have an “accuracy guarantee.”
Restrictions to filing your return online
The majority of Canadians will be able to file their tax returns electronically.
Here are some instances where a NETFILE submission is restricted:
- Filing a tax return for a taxation year before 2015
- Non-residents of Canada and/or your address is outside of Canada
- You became bankrupt within the two years before your tax filing
- You are filing a tax return for a deceased person
- You have changed your name.
- You are filing an amended return.
- Your social insurance number begins with 08 or 09
You can check out more NETFILE restrictions here.
The bottom line
Turbo Tax is Canada’s most popular and best-selling tax software. You can’t go into a major retail store at tax time without seeing the displays.
I used Turbo Tax (formerly QuickTax) for quite a while, but I found it often had inaccuracies. Since I am a veteran paper forms user of many years, I viewed the actual forms line by line to make sure I agreed with what the software had done with my entries. Because I have investment income, Turbo Tax always tried to upsell me to the Premium version, but the Standard version worked fine for me.
Last year I tried SimpleTax instead. I found it quicker and easier to complete. It will be my choice for this year too.
The best tax return software really depends on your personal preferences.
Have you used tax software in recent years? If not, would you try one this year?