When tax is a piece of cake

As I completed my tax return last month, I found myself amazed at how much the preparation and filing processes have changed since I first became a filer.

And that’s not just because I was jockeying for screen time with a 4, 6, and 8-year-old to get it done—at least not entirely.

As I multi-tasked one weekend through taxes, spring hockey confirmation, various Google searches, and summer-camp registration, I envisioned that old TV commercial where the retired future self visits the current self. I had to laugh: I could have been cast in either role at that moment.

Personal evolution

That old commercial ran back in the 1980s, which is when I prepared my first tax return. The various parts of the package lay spread across the dining table, and I laboured through it by hand—only using a calculator at the end to double-check the results.

Not surprisingly, my parents did it the other way round—for decades trusting their own arithmetic skills over the new-fangled plastic box with a dozen or so buttons. Imagine them now—well into their 80s—jostling with today’s tax-preparation software. That software can be like a black box. Many people might feel locked out of knowing what’s going on under the hood when they’re led step-by-step,Q&A-style, through their tax returns.

To complete, just add eggs

After you go through the Q&A, the last step is to file the return. In my case, I intended to use the CRA’s Netfile service, which as taxpayer I must do through a secure connection, without the intervention of the software.

As I downloaded the zipped file and got ready to click the confirm button, I couldn’t help but think of Betty Crocker. You see, General Mills had been successfully selling pre-made food for a couple of decades by 1952, but their cake mix was not taking hold in the marketplace.

As the folklore goes, a young executive suggested removing the powdered egg would allow the homemaker to add fresh eggs and feel the pride of ownership of the final product. Voila!

Of course, the security of filing one’s taxes is a legal matter, not an instance of marketing magic. And unlike the ingredients already in the cake box, the taxpayer is responsible for the inputs that feed into the software, and personally liable for that final click.

So: zip; click; file; confirm. The whole exercise, personal distractions and all, took me less time than Saturday-morning cartoons.

Apps do exist for tax preparation, but current offerings are limited in scope. They only allow basic return preparation. With tax preparation software and web services, tell clients to be careful where discretion or qualitative judgment may be required, such as for rental properties, foreign income or business filers.

Tax preparation software may be fine where things are straightforward, but in these kinds of situations, a human professional should be consulted.

Doug Carroll, JD, LLM (Tax), CFP, TEP, is Vice President, Tax and Estate Planning, Invesco Canada.