Reasons why you Should (or Shouldn’t) do your own Taxes

By Randall Orser | Personal Finances

For many people their tax situation changes every year, marriage, children, buying a house, starting a business are examples of life changes that affect your tax return.  So every year people have to solve the dilemma of doing their own taxes or hiring a professional to prepare their return.  As things change, the question is are you sure that you have all the knowledge to complete your return to your best advantage?

When you might be able to file your own taxes

1.  If you have confidence in your abilities as a numbers person, you keep track of all your receipts and transactions and you know all the ins and outs of your situation.

2.  If your tax situation is simple, you only have one T4, no dependants, no other investments or sources of income then you can easily file your tax return yourself.  

3.  If you don't own property or investments - once you acquire property, investments or retirement accounts then it can become difficult for you to up to date on all the deductions and credits that can be beneficial to your taxes.  In this case then it is probably best to let a professional do your return.

4.  Though the Canada Revenue Agency has a website it can sometimes be difficult to understand their jargon and the changing tax laws.

When it is best to hire a professional

1.  If you are not very good of keeping a track on your money, doing the books and tracking all the numbers is not for you then you should get in above your head and risk making a costly mistake.  You should hire a tax professional who can do the job correctly from the start and can save you the headache and even save you money in the long run.

2. If you have started a new business during the year hiring a tax expert will help you find deductions and prevent you from getting into trouble with the CRA so it is good idea to pay for their guidance, it will be worth it.

3. If your circumstances have changed during the year, you got married or divorced, had a child, or lost your spouse you may need help to file your return correctly.  This can also apply as your children get older and the tax credits and deduction that you usually claim expire.  If your child goes to college then  you can probably still claim them and their education expenses but a tax professional is the best person to know what is the best way to go in your situation.  

Benefits of doing your own taxes 

  • Less expensive
  • Takes less time
  • You know all the details of your situation

Benefits of hiring a professional to do your taxes

  • They are knowledgeable and up to date on the latest tax laws
  • You will get expert and experienced advice
  • They are an extra set of eyes that can catch mistakes
  • They become your advocate
  • They can find little known tax deductions for you
  • They can give you tax guidance throughout the year

So the bottom line is that it is up to you to decide what to do when it is tax time.  If you are not able to keep up then having a trustworthy tax professional to help you will make all the difference.

From an article in Careful Cents





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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.