Tax season can bring out a range of emotions: anxiety, frustration, and, for some, even excitement.

For many, filing taxes is straightforward, and doing it themselves is simple. Others have more complex tax situations, and it therefore makes more sense for them to seek the help of a professional. But how do you know which category you fall into?

In this guide, we’ll walk you through deciding whether you should tackle your taxes on your own, or if it’s time to bring in an accountant. We’ll also cover the basics of filing your taxes on your own, just in case you feel ready to take on the task. If you’re not sure whether or not you need to file taxes in Canada head to this link.  

Who should file their own taxes?

If your financial situation is straightforward, filing your taxes yourself can be a great way to save money and stay in control of your finances. You don’t need to be a tax expert to handle a simple return, especially with the wide range of tools and software available today. Here are some examples of people who might benefit from filing their own taxes:

1. You have a straightforward income

Your tax return should be fairly simple if you have a single employer, no significant investments, and only basic deductions. You likely receive one or two T4 slips, and your income is easy to report. If you’re working in a regular salaried or hourly job without any additional streams of income, you’re a good candidate for filing your own taxes.

2. You have simple deductions or credits

Claiming common deductions and credits, such as RRSP contributions, medical expenses, or charitable donations, is easy enough to do using CRA-approved tax software. As long as your deductions are straightforward and nothing unusual to account for, you can probably handle the process on your own.

3. You’ve had no significant changes to your personal situation

If your life has been steady without any major shifts such as getting married, having children, or starting a business - your taxes are probably similar from year to year. If this is the case, you can easily look back at last year’s return as a guide for the current year, with most software easily carrying forward your information.

4. You have access to online tools and the internet

With CRA-approved tax software available for download, filing your taxes has never been easier. Many of these programs are user-friendly and walk you through the entire process step-by-step, ensuring you don’t miss anything. If you’re comfortable using online tools, doing it yourself can be very manageable.

Basic Steps to filing your own Taxes

Knowing your filing deadline is a perfect starting point and the CRA has a list of deadlines for personal tax filers. If you’ve decided to file your taxes yourself, it’s essential to follow these basic steps:

1. Determine Your Tax Situation

• Are you a Canadian resident for tax purposes?

• What are your sources of income? Do you have employment income, investment income, or self-employment income?

Before starting, make sure you understand where your income is coming from and how it will be taxed.

2. Gather Necessary Documents

• T4 Slips: These slips show your employment income.

• T5 Slips: These are for investment income.

• Receipts for Deductions: Gather receipts for RRSP contributions, charitable donations, or medical expenses.

• Other Documents: If you’re claiming tuition credits, participating in the Home Buyers' Plan, or any other tax benefits, ensure you have the supporting paperwork ready.

3. Choose a Method for Filing

• You can file online through CRA-approved software. Here's a list of certified tax software that makes the process easier: Certified Tax Software.

• You can also use CRA's NETFILE service or submit a paper return (though this is more time-consuming and not recommended).

• The CRA provides a list of methods for filing your taxes HERE. 

4. Key Deductions and Credits

Filing taxes is taking your total income and subtracting eligible deductions to reduce your tax bill. You can find a list of eligible deductions for individuals on the CRA website.

Some of the most common deductions and credits include:

• RRSP Contributions: Contributions to your RRSP reduce your taxable income.

• Childcare Expenses: You can claim the cost of daycare, after-school programs, and more.

• Medical Expenses: Including prescription drugs, dental work, and other health-related expenses not covered by your employment health insurance. This also includes a portion not covered for example; you claim therapy at a total cost of $600 for the year and only $500 was covered. The remaining $100 can be claimed. Please refer to this page for a full list of which expenses can be deducted, as well as this page for a detailed list of medical professionals whose charges can be deducted, by province. 

• Disability Tax Credit: If you or a dependent have a disability, you may qualify for this credit.

• Home Office Expenses: Particularly relevant since the pandemic, many people now qualify for this deduction. 

After completing your return, submit it through the CRA-approved software or NETFILE service. Once submitted, you can track your return status using CRA’s My Account.

When Should You Consult a Professional?

For individuals with more complex financial situations, bringing in a tax professional can save you time, money, and headaches. While tax software is robust, it can’t replace a qualified accountant's expertise and strategic thinking. Here are some scenarios where consulting a professional is highly recommended:

1. You have self-employment or freelance income

If you’re self-employed or freelancing, tax filings become more complicated.

You’ll need to:

• Track your business expenses and figure out which expenses are deductible.

• Register for and remit GST/HST (if applicable).

• Deal with more complex deductions, like business-use-of-home or vehicle.

An accountant can help ensure you maximize your deductions while staying compliant with the CRA’s rules.

2. You have investment income and capital gains

If you have income from stocks, rental properties, or other investments, you must report this on your return. Calculating capital gains or losses on the sale of property can be tricky, especially if you’re unfamiliar with the rules. A professional can help you minimize your tax liability while ensuring everything is reported accurately.

3. You’ve experienced major life events

Marriage, divorce, new dependents, or receiving a large inheritance can significantly impact your tax return. A tax professional can help you navigate these changes and ensure you’re filing correctly and not missing out on any credits or deductions.

4. You have cross-border income

Things get a bit more complex if you’re earning income from outside of Canada. You’ll need to deal with foreign tax laws, income reporting, and possibly filing requirements in multiple jurisdictions. This is where an experienced accountant becomes invaluable.

5. You owe back taxes or are undergoing a CRA Audit

If you owe the CRA money or are being audited, having a professional in your corner is essential. They can guide you through the audit process, represent you to the CRA, and help minimize any penalties or interest.

6. You have complex deductions and credits

Some deductions and credits are more complicated than others, such as the disability tax credit, tuition transfer credits, or carrying forward losses from previous years. A tax professional can ensure you get the most out of these deductions while staying within the rules.

7. You want long-term tax planning

Accountants don’t just look at the current year - they can help you plan for the future. This includes optimizing your RRSP contributions, planning for retirement, and setting up tax-efficient investments. By working with a professional, you can develop a strategy to reduce your taxes in the long term, not just for the current year.

The Benefits of Using a Professional

If you’re unsure whether your tax situation warrants professional help, here are some benefits of hiring an accountant:

1. Maximizing Deductions and Credits: A professional knows the tax code inside and out and can help you identify deductions and credits you may not have considered.

2. Avoiding Costly Errors: Filing errors can lead to audits, reassessments, and even penalties. An accountant can help you avoid these pitfalls.

3. Peace of Mind in Complicated Situations: If your tax situation is complex, a professional can give you peace of mind, knowing your taxes are filed correctly.

4. Long-Term Tax Planning: An accountant can help you plan for the future, ensuring you make the most tax-efficient decisions throughout the year.

Conclusion

Filing your taxes yourself can be straightforward if you have a simple financial situation. However, consulting a tax professional can help those with more complex finances avoid costly mistakes and make the most of your deductions and credits.

If you’re ready to file your taxes, take the time to determine whether you’ll go the DIY route or consult a professional. Either way, ensuring your taxes are filed correctly will give you peace of mind—and might even put some extra money back in your pocket.

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