Taxes For Dummies
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Will you prepare your tax return manually for filing in Canada? Use tax preparation software? Paper file your return? NETFILE? EFILE? So many choices, so little time! There’s no need to panic, though. The pros and cons of each option are outlined here to help you choose the filing method that best fits your needs.

Choosing the preparation option that’s right for you

You know you have to file a tax return, but do you prepare your return yourself the old fashioned way, or using your computer, or do you throw in the towel and hire someone to do it for you?

Using your computer vs. a pencil to tally your taxes

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Ever thought of preparing your tax return using your computer instead of the old pencil and calculator method? Tax preparation software makes sense when you’ve already dived into the world of preparing your own return. And even for those of you still sitting on the fence, tax preparation software may provide the nudge you need.

Looking at the perks and perils of going the techno route

Using software to prepare your tax return has a number of advantages over paper filing. The favourite, of course, is automatic recalculation: When one number on your return changes, the program updates all relevant forms and recalculates your final tax bill.

Another advantage is that most software packages are dummy-proof, set up so all you need to do is find the window that corresponds to the particular slip you have — be it a T4, T3, T5, or so on — and fill it in based on what appears in your boxes. This can save you a lot of time and frustration!

Most tax software programs allow you to NETFILE your tax return, which is fast, efficient, and ecologically friendly. NETFILING means you send your return using the Internet, instead of printing it and mailing it in. If you’re anticipating a refund, you can expect to get it faster when you NETFILE, which is an added bonus!

Shopping for tax software

It’s surprising to see how many software programs are available to prepare Canadian tax returns. If your return is simple and you don’t print off a copy to mail in to the CRA, pretty much any program will do the trick. That being said, some programs don’t prepare Quebec returns, so watch out for that. Assuming you want to NETFILE your return, here are some CRA-certified options:

  • GenuTax: Downloadable multiyear software that is totally free! (Donations are welcome to fund ongoing development.) The software is Windows-only and doesn’t support Quebec returns.

  • H&R Block: You can have H&R Block complete your return for you, or use their Windows or Online Tax Programs to do your own taxes.

  • *Tax Chopper by Cute Tax Inc.: Online software; no Quebec returns.

  • *TaxTron: The software is available in Windows and Mac versions, and can handle Quebec returns. Support is available online or by phone in English, French, Chinese, Hindi, and Punjabi.

  • *TurboTax: You can download TurboTax by Intuit Canada for PCs from, or purchase CDs. Online editions of the software are also available for both PC and Mac users. It can handle Quebec returns!

  • *UFile: UFile is part of the Dr. Tax Software group. It is another program with Quebec return capabilities. You can either use the UFile Online, or purchase UFile for Windows to install on your PC.

Getting the most from tax pros

For some people, calling for help is the last resort — and preparing their own tax return is no exception. Sometimes, however, admitting defeat and hiring someone before you get into trouble is a good idea.

Dealing with a tax professional

Be sure you have accumulated all the information necessary before sending it to your preparer. When you have a business, your best bet is to summarize all your revenue and expenses ahead of time. You’ll cut down on your fee, and ensure no relevant information is omitted.

Asking the right questions

Here’s a handy list of questions to ask your tax professional to ensure he or she can handle your situation:

  • *What services do you offer? Some tax professionals only prepare tax returns; others will help you with other matters such as retirement planning or estate planning.

  • *Have you worked in this area before? When you have your own business, or are an avid investor, make sure your professional has worked with similar situations before.

  • *Who will prepare my return? Unless you’re dealing with a sole practitioner, the person you’re speaking to will not necessarily prepare your return. Don’t be alarmed if a junior staff member prepares your return — this is common practice and can actually save you preparation fees.

  • *What is your fee structure? Most tax professionals charge by the hour, so make sure you ask upfront for the hourly fee, as well as for an estimate of the time your return will take to complete.

  • *What qualifications do you have? Tax professionals should have completed a two-year, in-depth tax course offered by the Canadian Institute of Chartered Accountants.

Figuring out how to file your return

After you prepare your tax return you have some choices for filing your return with the CRA. What’s the best choice for you? Read on.

Turn it in online: Electronically file your return

Electronically filing your return is a great choice because it’s relatively easy, you can get your refund faster, and you can save a tree and the cost of a stamp!

Understanding the difference between NETFILING and EFILING

You can electronically file your return in one of two ways:

  • NETFILING your return. If you’ve prepared the return yourself using CRA-approved tax software, you have the option of NETFILING your return. A list of CRA-approved tax software is on the CRA website. If you’re able to NETFILE, the CRA will send you a four-digit access code in your annual tax return information package. If you lose the number, go to the NETFILE website and apply for your code online, get it via MyAccount, or call the CRA e-Services Helpdesk at 1-800-714-7257.

  • *Having your return EFILED. EFILING is used only when you’ve hired someone to prepare your return for you. The CRA must approve tax preparers to EFILE, so if you hire someone to do your taxes you’ll want to ask them whether they are EFILE-approved. You can’t EFILE your tax return yourself.

Paper filing: The old-fashioned way

Of course, not everyone embraces the computer. If you want to paper file your return you have two preparation options:

  • You can fill out your tax forms by hand — ask the CRA to send you the forms, print them from the CRA website, or pick up a copy at your local post office or CRA office.

  • You can go for a hybrid approach, preparing the return using your computer but then printing off a copy to mail to the CRA.

After you’ve prepared the return, the paper filing is easy. Just attach necessary information slips and receipts, sign your return and place it in the mail. Make sure you postmark it no later than midnight on April 30 to avoid late filing penalties. And don’t forget a cheque, if you have a balance owing. (If you or your spouse were self-employed in the year your returns are not due until June 15 but your tax liability is still due on April 30!)

Money in the bank: Direct deposit of your tax refund

When you set up direct deposit with the CRA you get your tax refund a few days earlier than if it were mailed to you. You don’t need to worry about your tax refund cheque being lost, or about making a trip to your bank.

Complete form T1DD, “Direct Deposit Request,” with your banking details. This form can be sent in to the CRA at any time. If you haven’t sent it in before your tax return is completed, you can send it with your return.

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