I’m a big fan of doing your own taxes but that wasn’t always the case.
For several years, the idea felt daunting. The way I saw it, the existence of professional tax prep services suggested it was not a job for a novice, especially one with so little experience taking care of “adult” business.
So, for years, I gathered my documents and handed them over to someone else to deal with.
And for years, it worked out just fine.
But over time, I started to question my assumption about filing taxes. As I got older, I started to wonder: is it really that difficult a process?
I decided to find out. We picked up Turbo Tax at the grocery store and I set to work preparing our tax returns.
I’ve been doing our taxes myself ever since.
But what about you? Should you be doing your taxes yourself or taking them to a professional?
Here are some things to consider when it comes to making decisions about doing your own taxes.
Before I get into reasons I think a person should consider doing their own taxes, it’s important to note the most important factor in this whole discussion:
Your level of comfort.
If the idea of doing your own taxes makes you feel uncomfortable or anxious, maybe it’s not your time. There’s absolutely no shame in bringing your taxes to someone else — a family member or a professional. Even if you do feel fine about the idea of doing it yourself, not wanting to is a totally valid reason to put it in the hands of someone else.
The first and most important reason you should consider doing your own taxes is because you want to. Full stop.
Common reasons for not doing your own taxes
When I talk to people who are not planning to do their taxes themselves, there are typically two reasons they give for the decision.
- They think it’s too complicated
This is the big one and I get it, because I was this person. Preparing a tax return seems like a very complex process — and if you don’t think so, all you have to do is take a look at the paper form. There are so many different elements that can go into a tax return, so many different types of slips and credits and deductions; it’s really no wonder many people feel overwhelmed about the idea of tackling the work on their own.
- They worry they’ll mess it up and it’ll end up costing them a ton of money
Hand-in-hand with the complicated factor, the idea of doing something wrong on a tax return and then having to deal with the Canada Revenue Agency…well, it sounds like a nightmare. Why put yourself through that when you have the option to bring your tax stuff to someone with more experience?
Three reasons you should consider doing your own taxes
If the idea of going the DIY route makes you feel uncomfortable, gather your documents, bring them to someone you trust and call it good.
But if comfort isn’t the issue for you, there are three times I think it’s worth considering doing your taxes on your own.
- Your tax situation is simple
For years, my tax documents included a single T4 slip and forms for tuition credits. If you only work one job, don’t own a business and/or don’t have any complicated investments, there’s a good chance preparing your tax return won’t be all that complicated — which means it might make sense to do it yourself.
- You don’t mind digging into things you don’t understand
As I’ve gotten older, my tax situation has changed. It’s still on the simple end, but, for example, over the last couple years I’ve done some freelance work for a client in the United States. That meant I had to do some research to figure out how to account for that income.
Doing this work didn’t bother me — I found it interesting. If you don’t mind doing research when you encounter a situation you don’t understand, the DIY route might work for you.
- You’re not worried about making an error/being audited
I have only been audited once. When I opened the letter, I freaked out…for about five seconds. Then, I gathered the information requested and sent it off to the CRA. I knew I had all the documents so I wasn’t too worried about it.
Looking back with a few more years of experience under my belt, even if it turned out I made an error, I know I would be able to work with them to figure out how to correct it. Not the ideal scenario, but also not the end of the world.
If you’re OK with the fact that you could be audited or that you could have to correct something, you might want to try doing your taxes yourself.
Benefits of doing your own taxes
If you decide to give it a go and do your taxes on your own, there are some benefits.
- It’s less expensive
In Canada, there are several options available for individuals who want to file their own taxes — and many of those programs offer free or pay-as-you-wish options. The Canada Revenue Agency has a list of certified tax software available online.
- If you get a return, you get to keep the whole thing
Following the first point, some places that charge for tax prep also take a cut of the refund you receive. If you file your own taxes, you get to keep the entire return.
- You control when you file
When you do your taxes on your own, you’re in the drivers seat. You don’t need to make an appointment or wait for someone else to have time to work on your taxes. Whenever you’re ready, you can begin the filing process!
- You get a new skill for your financial toolbox
Learning how to prepare a tax return is a great skill to have. Even if you reach a point where your tax situation gets more complicated and you need some professional guidance in the future, knowing the basics about how the process works isn’t a bad thing. Hooray for financial literacy!
Our plan for 2020 income tax
This tax season will mark my fourth year doing our taxes myself. This year, I will be using Wealthsimple Tax.
Formerly known as SimpleTax, Wealthsimple Tax is a “pay-what-you-wish” software for Canadians. It was originally designed by a team from across Canada and it aims do exactly what the name suggests: simplify the process of filing your taxes. It was purchased by Wealthsimple in 2019.
The software is web-based so you don’t need to install anything. As a result, you can work on your taxes on any device, so long as you have your password and an internet connection.
The “pay-what-you-wish” model gives you the option to decide how much you want to pay to prepare your return — if you want to pay anything at all. This will mark my third year using this software; I didn’t pay anything in year one (mostly because I wanted to try it out first) but I did in year two and will again in year three.
I shared more of my thoughts about Wealthsimple Tax / SimpleTax here. If you’re looking for an affordable software option that’s easy to use, I highly recommend checking it out.
The idea of doing your own taxes can feel daunting at first but it might be worth pursuing.
Ultimately, it comes down to comfort. If you don’t feel comfortable with the process, there’s no shame in seeking guidance. But if you feel up for it, give it a go! If you’re anything like me, you may be surprised by how easy it can be.
Do you prepare your own taxes?