Soon after graduating university with my fancy bachelor of applied arts in journalism, I discovered that full-time jobs in journalism were pretty hard to come by. (There was a recession on.) So I decided to try my hands as a freelance writer and editor. That year, I made a grand total of about $8,500. Figuring out my taxes was a piece of cake. Thankfully, the next year I earned quite a bit more, and did again each year after that.
Soon, I realized that in order to keep an accurate account of all my various sources of income and to differentiate between legitimate and non-deductible expenses, I needed some professional help – so I hired an accountant. Here, we help you figure out if and when you too might need to hire a pro for your tax needs.
Stick With The DIY
If you’re a single person with a steady, full-time job that pays you a regular salary by way of bi-weekly cheques, with all your income taxes, CPP, and other deductions taken off the top, odds are you should be able to handle filing your taxes on your own. While the forms can appear intimidating, if you only have a few standard deductions like RRSP contributions and charitable donations, it’s a pretty straightforward process. When you use one of the Canada Revenue Agency-approved tax-filing software programs they often include tips on deductions you may not have been aware of, plus you can get your refund up to a month sooner than you would if you snail mail your return in.
A No-Brainer For the Self-Employed
If, like me, you’re self-employed and making a living wage or better, it’s probably worth bringing in the pros to do your taxes. They’ll help you calculate the percentage of your utility bills, property tax, and other household expenses you can deduct for a home office, explain which records you need to keep to claim car expenses, and likely find you a number of ways to reduce your tax bill that you never would have thought off, all for a surprisingly low fee. (I pay about $200 a year for having my return filed.) The part that makes it a no-brainer: professional fees like accounting services are a deductible expense.
Another group of people who should use accountants are landlords. Even if you’re just renting out an apartment in your basement to help cover you mortgage, you need to claim those monthly rent cheques as income. On the upside, you can deduct the cost of renovations, and a portion of bills like utilities, property tax, and even the interest you pay on your mortgage. You could try to figure it out yourself, but an accountant with experience in rental properties will have a broader understanding of which claims are legitimately deductible. An accountant can also help you better understand the implications of Capital Gains Tax and how you can offset its impact when you sell a rental property. And, again, their fees can be used as a tax deduction.
The Grey Group
Not every situation is so black and white. If you’re fortunate enough to have a steady gig, plus a collection of investments that bring in additional income (such as stocks, currency holdings, or GICS), it may again be worth your while to have an accountant keep track of all your holdings and ensure you’re making the best decisions when it comes to tax implications.