A Relationship with a Tax Professional is a Smart Investment

Seventy-one per cent (71%) of Knowledge Bureau Report readers feel that do-it-yourself tax filers using tax software and NetFiling can’t lose by investing in a relationship with a tax professional.

While most would agree that everyone should learn how to file their own taxes, the services of a tax professional can point out available credit that are easily missed and can mitigate potential issues with CRA.

As Joan points out: “Revenue Canada and the Tax Act are very good about telling people what they cannot do, but not as open about what they CAN do. I find the interpretation of “reasonable” only comes with lots of experience in addition to know where to look things up. I don’t remember everything even after almost 30 years, so I don’t know how a lay person can think they could process their own return, especially now with so many complications and retroactive credits. I don’t feel I have done my job until I can save a new client the equivalent of at least my fee, especially the first year.”

In response to Joan’s comment, Sharon adds: “Having been exposed to income tax for over 30 years, I understand the “history” of the system (of course, nobody really understands the system, themselves). I offer a review service for those who prepare their own returns using one of the commercial software programs.”

Lynn speaks to the value of investing in a tax professional, especially for the self-employed: “Many people who try to do their own taxes and/or bookkeeping are not familiar with tax rules and regulations. Credits are missed, self-employed owners miss many tax write-offs as they do not know what the allowable deductions are. Investing time and money in a tax professional is well worth it.”

Despite the excellence of the tax-filing software available to do-it-yourselfers, Gayle points out that the software can’t fill in the blanks about your tax position: “It has been my experience that on many occasions I have been able to improve the tax position of the simple and more complex user because they do not have the knowledge of all the tax regulations. The software today is great but “what’s behind” that software deduction is not always clear to an inexperienced user. They can also make errors on interpretation that results in communications with CRA.”

Marg also agrees that tax-filing software only shows a limited view of a person’s full tax picture and that tax professionals can see beyond the math: “I, too, agree that a relationship with an advisor is a very good investment. There is so much more to a person’s tax picture than T4s & T5s. After 30 years in the business, especially as boomers retire, I see more and more often how mistakes made years ago are now affecting their bottom line. Tax specialists should see so much more than numbers! They provide guidance which could change the future of the taxpayer and their family…software can only do the math.”

In support of the confident, knowledgeable do-it-yourself tax filer, Bob comments: “If a taxpayer is confident in doing his taxes, which many are, why not save the cost of going to a tax professional. I know I did my own taxes while I was working as an accountant in a firm. I eventually became a professional in tax. The main issue, as I have found out over the years of doing taxes professionally, is that if CRA challenges any of the entries, the tax filer then goes to the professional for help and ends up paying for his or CRA’s mistakes. Conclusion: If you know what you are doing, go ahead. If you are unsure go to a professional.”

Russ summarizes what many may conclude regarding tax do-it-yourselfers, drawing comparisons to do-it-yourself auto repairs: “Do your own auto work then call the garage mechanic for some free advice when your car doesn’t work. The do-it-yourself crowd WANTS a relationship with tax professionals they just don’t want to pay anything for it.”

Knowledge Bureau thanks the 114 people who participated in March’s poll. This month’s poll question: Do you agree with the new budget proposal that allows CRA to pay a taxable finder’s fee on international tax cheats?