Canadians take DIY approach to taxes

An overwhelming majority of Canadians are doing their own taxes and are confident they are doing a good job, according to a BMO Harris Private Banking survey.

The study noted that despite the anxiety that often accompanies tax season, more than half of taxpaying Canadians (59%) have decided not to engage a professional to assist them.

“It’s encouraging to see that Canadians have adopted a do-it-yourself, self-reliant attitude when it comes to preparing their own taxes, but there are instances where it makes sense to seek the help of a professional,” said John Bathurst, vice-president, wealth services, BMO Harris Private Banking. “Expert advice can help simplify matters, and, more importantly, help individuals and families identify benefits that otherwise could have been missed.”

An overwhelming 86% of those who fall into this group feel confident that they are maximizing their refund by taking advantage of all tax credits and programs available.

A tax professional can also help individuals who may have inadvertently claimed deductions to which they are not entitled, thereby creating an unfounded expectation of a tax benefit, he added.

Other key findings from the survey reveal that women (22%) are more likely to ask a friend or relative do their taxes compared to men (15%). Close to two-thirds of Canadians (64%) file their tax return electronically. Those who are married are more likely than those who are single to file electronically (70% versus 54%).

Bathurst detailed a few scenarios where a tax professional can help:

• Rental properties – There are often costs that can be deducted from net rental income. An area that often requires analysis is the difference between repairs and maintenance expenses and capital improvements. If you own a rental property, a tax expert can help you determine the appropriate status of your rental costs and maximize your deductions.

• Job relocation – If you have moved your home for work or business reasons, there are specific tax rules related to moving expenses that could benefit you. Knowing the rules ahead of time can allow individuals to plan their move and retain records that will maximize their deductions in this area.

• Change of marital status – If your marital status has changed within the tax year, and you are required to make payments to or receive payments from your previous spouse, a financial expert can ensure you are filing in accordance with the agreements that had previously been reached.

• Certain categories of employment – You may need a tax professional’s help if you are required to pay expenses related to your employment. Often, commission-based employees face a labyrinth of rules with expenses related to transportation, entertainment, home offices, supplies, salaries of assistants and other related expenses. Come tax season, you will face the daunting task of determining which costs can be deducted. Professional advice can save you time and provide assurance that your tax return is filed claiming the maximum appropriate deductions.