Tax Tips

Tax Tips

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Tax Tips from The Tax Toad

Over 40% of Albertans use a tax preparation service. A tax preparer stays up to date on the tax laws, and valid tax breaks. Software may be fine for some tax filings, but are you really getting EVERYTHING back you should? That software is not going to tell you the loopholes, or that you have declared invalid expenses.

With Covid 19 lockdowns and supports, your tax person should be able to help you navigate these waters; this may mean adjustments to prior years, or involve this current year. Talks to your tax person about your options, many clients have been sent letters demanding repayment. That repayment is not necessarily needed when you have a tax professional look at your tax returns.

Here are a couple things to consider when choosing a tax preparer, or personal tax software:

1) Experience: A lot of tax preparing offerings pop up at tax time, not all them good! How long have they prepared taxes, what is their audit ratio, what their audit win rate, where they learnt, and how long the classes were. Are they available year-round? Do they provide audit service? Some of the biggest name recognized places, train 2 days-2 weeks, before setting preparers loose on your returns, and some only read the manual with the software they bought at the store. ASK QUESTIONS.

2) Cost: With any service, there are fees, and tax preparation has many different fee models. The first and most desirable is a flat fee. In this situation, your tax preparer will usually give you an estimate for their services during a quick consultation. Other tax preparers, charge an hourly rate or a per form rate (most common in Alberta), which is less ideal since you won't necessarily be able to nail down your total costs until they are completed.

3) Audit Support: Canada Revenue Agency will flag the most honest tax return for an audit, being audited does not mean you are suspected of any wrong doing, it is a computer-generated request for proof in most instances. Your tax preparer should provide basic audit support and keep copies of the most commonly issued audit items in order to handle the audit. You may have been audited, but the tax preparer has handled it while you have enjoyed summer.

Intensive audits may come with additional fees for photocopies, time and courier expenses, for example small businesses or farms that have a large volume of paper to copy and send in. However, your basic requests for proof of medical, childcare, child custody for example, should be included in the base price.

4) Availability: Tax preparers tend to be pretty busy during tax season. Throw in the fact that many are still learning last year's tax changes, or even taxes as a whole, you might be hard-pressed to find someone who can hammer out your return on a whim. You have until April 30 to file your return yearly. If you owe, as an individual, small business or farm, this is your deadline to pay CRA, so be sure to get in to have your taxes filed before mid-April to avoid interest and penalties. If you have a refund, CRA is happy to continue collecting interest on the money you leave with them and you have a little more time to file, unless you get child benefits, then you need to file by June 1st or have those benefits cut off.

The later you go see your tax preparer, the higher risk you might be late to file, as they have all the other returns that came in before yours to do! You also want the tax preparer to be available all year, many offices pop up in February, and close May 1st, that does not help you win audits! Do be mindful of the tax preparer’s office hours in the off season, especially if they work out of their home, they have earned their downtime! (For example, I am closed Dec thru mid-January for 6 weeks of resting and preparing for the next tax season).

Nicole has been a tax preparer for 15 years; she trained at Liberty Tax and worked with them for many years before striking out on her own. She has been The Tax Toad for 5 years, and also is on her 3rd year working as a Tax Expert servicing Turbo Tax customers who purchase review packages. Her audit rate is low, the audit win rate is high and she never gives up, she is available at her home office year-round, and charges flat fees. She is fast, friendly, slightly whacky, enjoys seeing her clients, and spoiling her dogs rotten.