Most people know that using professional tax preparation services can save time and money. Allowing a tax professional to prepare your taxes can reduce the risk of errors and audits. Yet, millions still choose to prepare taxes on their own. Here are seven of the top reasons to start using professional Canadian tax services.
1. You Started a New Business during the Past Year
Consider hiring a tax professional if you have recently launched a business. The tax responsibilities are different for businesses compared to individuals. You may need a tax professional to help you navigate and understand your business taxes.
Understanding what you can include in your business deductions is often complex. Tax preparation services ensure that your prepared return includes all applicable deductions and write-offs.
2. You Are Filing Your First Tax Return
If you have recently settled in Canada and need to file your first tax return, hire a professional. The Canadian tax system may be confusing for those who are new to the country. A tax professional helps you explore all available benefits and credits.
For example, many parents qualify for the Canada child benefit. Goods and services tax (GST) and harmonized sales (HST) credit are also often available to newcomers. Overlooking these benefits and credits will lower your potential return.
3. You Have Recently Moved
Tax filers may claim certain moving expenses paid during the year. However, you need to meet specific requirements to include the deduction. You can claim moving expenses if you moved due to business or schooling.
For example, if you moved to study full-time at a university or to open a business at a new location, you may qualify to deduct moving expenses. The new home must also be at least 40 kilometres closer to your new school or work location. A tax professional can help you understand these requirements and other restrictions.
4. You Recently Emigrated away from Canada
If you have moved from Canada to another country in the past year, you may still need to file a tax return. Some emigrants also need to pay a departure tax on capital gains. This may include valuable property such as jewellery, paintings, and collectibles.
Failing to pay the necessary taxes could result in penalties and fines. Working with tax experts keeps you from skipping any necessary tax filings, such as the departure tax.
5. You Work in the Gig Economy
The gig economy has grown significantly in the past couple of years, but many freelancers do not fully understand their tax responsibilities. Canadian residents need to report income from all sources, including freelance work.
Gig workers may also qualify for certain deductions. For example, you may add eligible business expenses to your deductions. Claiming deductions related to work expenses requires you to keep detailed records. You need receipts and invoices showing how much you paid for any expenses that you claim. Tax professionals can help you review these deductions and other tax obligations for gig workers.
6. You Need to Correct Past Returns
You may owe the government penalties and interest if you made mistakes on previous returns. Tax experts can help get your tax affairs in order. This may include correcting your reported income or requesting a change to the GST/HST Return.
7. You Lack the Time or Patience to File Taxes
Convenience is one of the most common reasons for using a tax preparation service. If you lack the time or patience to file your return, you may rush the process. Rushing your return increases the risk of mistakes that may result in audits or penalties.
The bottom line is that hiring a tax professional can save you time and stress. You can avoid filing your taxes late, making mistakes, and missing out on potential deductions. If you want to maximize your return, a tax preparation service is your best option.