Filing online? A guide to the latest tax software
Certified programs now allow you to bypass Netfile and send tax files straight to CRA
Tax season can be tough on all of us, no less so for trees. Last year, just over seven million Canadians filed their taxes the old-fashioned way — mailing in ink-and-paper forms — which, according to some very rough math, required introducing some 2,200 trees to the business end of a chainsaw.
But that's an improvement, thanks to the rising popularity of filing taxes electronically, on the 3,300 or so that were turned into T1s for the 2010 tax year.
Most tax returns are now delivered electronically to the Canada Revenue Agency (CRA), and it's not hard to see why. Electronic options like EFile, which is the internet-based filing system used by professionals who prepare tax returns for a living, and Netfile, the system individual taxpayers use to file their returns electronically, are fast, secure, more accurate, and refunds can take as little as eight business days with direct deposit.
For a mailed return, you can wait as long as six weeks to get a refund.
The CRA itself is recognizing that fewer people are opting for paper returns and last year stopped mailing out paper forms. It also cancelled its phone-based Telefile service and simplified its Netfile service by dropping those personal, four-digit security codes. As of 2013, it requires tax professionals who prepare more than 10 returns to file electronically.
How we filed in 2013
Paper: 7,086,618 (25%)
Netfile: 6,805,779 (25%)
EFile: 13,953,964 (50%)
Total: 27,846,361 (100%)
Source: Canada Revenue Agency
A variety of software programs are available to help Canadians file electronically. Most cost money, but some are free for those with modest incomes. A few are offered free to everybody.
For the do-it-yourself types, this means using Netfile, a web-based service that allows taxpayers to be their own accountants and file their returns over the internet.
Most tax returns travel via EFile, but one-quarter of taxpayers, just under seven million people, filed their taxes through Netfile in 2013. The popularity of the service has grown rapidly since its 1999, debut when it was used by just 530 people.
How to Netfile
Using Netfile only requires your social insurance number, date of birth and a "certified" tax program. The CRA has a list of certified programs on its website, and it will be updated through March as more programs satisfy the certification requirements.
New this year, most certified programs will submit returns directly to the CRA — sparing you the task of uploading files to the agency's website.
The CRA limits the number of returns that can be filed to Netfile from one computer or online account to 20 in order to ensure the service is used by individual tax filers only and not tax professionals trying to skirt costs by using cheaper tax-preparation programs meant for individuals.
The Netfile service is open as of Feb. 10 for filing 2013 returns.
A T1 form weighs 0.119 kg, which multiplied by the seven million Canadians who filed paper tax returns in 2013, works out to 833,000 kg of tax forms.
Assuming an average pine tree is 0.3 m wide, 18 m high and has a 50 per cent yield of pulpable wood, it takes one tree to produce about 365 kg of paper — or 2,282 to make all those T1s. This an improvement over last year, when tax forms consumed over 3,000 trees.
Source: How Stuff Works
Taxpayers have two main options: using software that is loaded onto a computer or mobile device or using interactive web-based programs. Once these programs complete your tax return, you can either file it electronically or print it out and mail by post.
Some programs can be bought in a store and come on a disc that installs the software on your hard drive. Others allow users to download the software directly from the company. Some programs offer both versions.
Often, these programs allow you to prepare multiple returns but tend to be more expensive than the web-based tax programs where users interactively prepare their returns online without downloading the software.
Here's a quick look at the particular bells and whistles of some of the most popular CRA-certified tax-preparation programs for Netfiling. For a full list, see the CRA website, which is progressively updated as additional programs are certified.
The $69.99 Premier version ($34.99 online) adds features for those with rental or investment income to report. The $109.99 Home and Business edition ($49.99 online) is for consultants, contractors and others with business income.
All of the downloadable versions are for PCs only. If you have a Mac, you'll need an online version (see below).
Intuit also offers an iPhone app, SnapTax, for $9.99, which can handle very simple returns for those with no dependants and who are under age 65 and live anywhere in Canada expect Quebec or the territories.
Like TurboTax, UFile for Windows uses the interview method to lead users through the tax-preparation process. UFile is installed on your computer (either via download or disc) and allows users to prepare as many as four returns for $19.99 or 12 returns for $39.99. (You can pay extra to add other returns.) It can handle self-employment income, including income from rental properties, foreign income and pension splitting, among other scenarios.
The company also offers several Pro editions (again, only for Windows), starting at $99.99 for 20 returns, and an online version (for Windows, Mac and Linux) that starts at $15.95. Its software is free for those with income under $20,000 first-time filers and students.
Deadlines for Netfile
Service is open as of Feb. 10, 2014. Personal tax returns for 2013 are due May 5, 2014.
Penalty for filing late: 5% of tax owing, plus 1% interest per month.
Source: Canada Revenue Agency
Until March 31, H&R Block is offering the desktop version of its tax software for free for the first return. If you have more than one return to file, it will cost you $9.95 for up to 10 returns and $14.95 for up to 20 returns.
The desktop version will only work on Windows-based computers.
Like its main competitors, H&R Block software employs the question-and-answer format and allows you to import your tax data from other software products.
The software can prepare a number of different personal returns, including for those with multiple small businesses, rental properties, commission or foreign income and childcare expenses.
TaxTron uses a step-by-step approach and works on Windows and Mac operating systems. It's free for those with total income of less than $31,000 and for full-time students.
A family licence, which costs $24.99 ($39.99 for Mac), will allow you to prepare and file five returns for earners with a total income of $31,000 or more and 15 returns for earners with income under $31,000.
This downloadable program charges $5.99 for one return, $7.99 for two returns, $9.99 for 10 returns or $17.99 for 20 returns. It will run on PCs with operating systems going all the way back to Windows 95 but is not available for Macs. It also cannot be used to file Quebec provincial returns.
This downloadable software costs $6.99 for one return and $13.99 for a licence that allows users to prepare up to 10 returns. It runs on Windows and Mac operating systems and is free for those with a total family income of less than $25,000. There is a $5 fee if users want to receive the CD-ROM version of the software. It can't be used to file Quebec provincial returns.
TaxFreeway is a downloadable program that costs $9.95 for up to 20 returns ($14.95 for the Mac version). It also offers a "3-in-1" package for $19.95 that allows users to file up to 20 returns using a PC, Mac or iPad. It claims to be the only Canadian tax software that allows users to work in interview and form modes simultaneously.
StudioTax is the work of BHOK IT Consulting, a group of software professionals in the Ottawa area. It's free to download and use regardless of income for up to 20 returns but asks for donations. One caveat: it's Windows only. The company's website says that "hundreds of thousands" of people use its free service.
This is free downloadable tax software for Windows operating systems. It uses the familiar interview method and cannot handle Quebec provincial returns.
This French-language software is available to Quebec residents only using Windows operating systems. The basic version costs $24.95, although "The Demo" edition allows for two free reports when reported revenues are less than $ 25,000. It bills itself as comprehensive and easy to use.
This service is available for Mac and PC users via download through Cloud services. It is free for students or total income below $25,000. Otherwise pricing starts at $11.99 for a single return. eTaxCanada uses actual tax forms, but a step-by-step interview process is available if desired.
This service provides free download and online versions, promising no extra charge for complicated tax returns. It ensures users data will be safe, however several links on the site, including the link to dowload the software, are broken.
The online version of TurboTax Standard is $17.99 for a single return, which will suffice for typical taxpayers with the usual claims like RRSP deductions, charitable donations and medical expenses.
But the company offers a free version for taxpayers with simple taxes to file. And they mean simple: no RRSPs, no investment income, no charitable donations and no pension or income from tips. You can also file for free if you’re a tuition-paying student with a household income of $20,000 or less.
Premier edition for those with investment or rental property income is $32.99 for a single return. A Home and Business edition is also available online for $44.99 per return.
Uile's online solution costs $15.95 for the first family member, plus $10 to include a spouse. You can file tax returns for dependent family members for free. All students and families with a total income of less than $20,000 can also file for free.
H&R Block Online
Like its sister desktop version, the online version of H&R Block's software is free for the first return — until March 31. Each additional return will cost you $9.95. It works on both Macintosh and Windows-based operating systems and also works on tablets.
This is a newly certified web-based tax program that is free for everyone regardless of income or types of deductions. The three Vancouver-based creators of SimpleTax claim they made the software free because they believe "you shouldn't have to pay to do your taxes." The program is equipped to handle rental and business income and other scenarios but not Quebec returns or returns for tax years before 2012. It is iPad friendly and doesn't require you to set up an account, which also means your data is not stored and you won't be able to review your past returns in future years.
If you like the program, you can make a donation to help fund it before you submit your return.
EachTax.com charges $5.99 for the first return and $3.99 for each additional return. It’s free for new customers, regardless of income, new immigrants, seniors and those who earned $25,000 or less. The software cannot calculate Quebec provincial returns.
TaxChopper (formerly CuteTax Online)
TaxChopper costs $9.98 for one return, $15.98 for two returns, $19.98 for three to five returns and $25.98 for six to 15 returns. It's free for those who made less than $25,000 and were single, divorced, separated or widowed at the end of the tax year. Couples with incomes below $30,000 and students who spent six months of the tax year enrolled in full-time studies can also file for free.
This web application, available from MacroNT Inc., is free unless you have self-employment or rental income, dependant-related expenses or other deductions such as RRSPs, in which case it costs $12.99.
AdvTax bills itself as an "extremely easy and incredibly fast" web-based tax program that is free for the 2013 tax year. Its text-heavy website may not be easy on the eyes, but it claims AdvTax will help you complete your return in just five minutes. It claims to support English, French and Chinese but those who need to file a Quebec tax return or are new immigrants won't be able to use the program. The program can be used on tablets and Android phones as well as desktop and laptop computers.
This web-based tax program is available for $9.99. It's free if your total income is less than $20,000. It is one of the programs that this year allows you to submit your return directly to the CRA without having to first download a .tax file. Quebec returns are not supported.
Finally, time for a quick mention of TaxMan — the work of an opinionated Victoria man who calls himself "the poor man's accountant."
Since 1995, he’s offered a "moron-simple" program that uses CRA-approved forms. You can't Netfile this baby — you'll have to print it up and mail it in — but it is free, regardless of the number of returns or income.
TaxMan does, however, accept donations, for those who feel so inclined.
Of course, everyone who uses tax software can always file the old-fashioned way — on paper, via Canada Post. You just do your data entry through the program and then print the results and send them in.
You can also download all the forms you need from the Canada Revenue Agency's website or pick up a tax package at a CRA service kiosk or at the post office and fill everything out (shudder) by hand.