Minds on.

Priya and Am decided that it was time to talk about next steps. They agreed that getting income tax software or paying a tax advisor might be their best option, but they do not know much about that either, so they agreed it would make sense to look into these options more closely.

This is the did you know icon. Did You Know?

Each year, the Canada Revenue Agency delivers a report to Parliament.* In 2014, this report included statistics about the speed and accuracy of their processing or tax returns and payments.

According to the CRA, 53% of the 28.3 million tax returns filed in 2014 were filed by tax preparation services on behalf of clients.

This is the question/answer icon. Question


How many tax returns were filed by tax preparation services in 2014?

  1. About 1,400,000
  2. About 1,500,000
  3. About 14,000,000
  4. About 15,000,000
Answer

d. About 15,000,000
53% of 28.3 million = 0.53 x 28.3 million = 14.999 million which is close to 15 million
15 million can also be represented as 15,000,000.

In the same 2014 report, the CRA reported that 80% of individual tax filings were done electronically.

There were about 35 million individual income tax returns processed in 2014.

This is the question/answer icon. Question


How many tax returns were filed electronically?

  1. About 14,000,000
  2. About 28,000,000
  3. About 33,000,000
  4. About 37,000,000
Answer

b. About 28,000,000
80% of 35 million = 0.80 x 35 million = 28 million
So, 28 million income tax returns for individuals were filed in 2014.
Note: 28 million can also be represented as 28,000,000.

This is the discussion icon. Consider: Electronic Filing

Most people file their personal income taxes electronically. They use some form of income tax software product or income tax filing service to help them complete their taxes.

Why do you think the Canada Revenue Agency takes the time to gather and interpret data and then publish this statistic about how many Canadians file their taxes electronically? Who cares?

  1. Select one group from the list below.
  2. Think about why they might be interested in this statistic and how they might use it.
  3. Write down your ideas.

Groups (Choose one)

  • Group 1: The Canadian news media (e.g., newspapers, TV and radio news, news websites)
  • Group 2: Income tax preparation businesses
  • Group 3: Accounting firms that offer income tax preparation services in addition to many other services
  • Group 4: Retail stores that sell income tax software (e.g., office supply stores, large grocery store chains)
  • Group 5: The Government of Canada
  • Group 6: App designers
  • Group 7: Families
Action.

Priya and Am set out to get more information about products and services that can help guide them as they try to make the right income tax decisions.

Comparing Income Tax Supports

The first thing Priya and Am explore: Are there products or services they can get for free that will give them the guidance and support they need?

Free Services

There are many free supports available to individuals who need help completing their personal income taxes.

Priya is able to get a lot of information by visiting the Canada Revenue Agency site, watching videos, and reading help guides. She found out about the Community Volunteer Income Tax Program (CVITP).

Watch the following video introduction to the Community Volunteer Income Tax Program.

This is the ePortfolio icon. Assignment: Researching Volunteer Programs

In the video, the CRA site was mentioned as a place you could go to get more information.

Go to the CRA site to find answers to the following questions. You will have to scroll down and click on the different areas in Services and Information section.

  1. What is the Community Volunteer Income Tax Program?
  2. Are you eligible to get help through this program?
  3. How close to you is the nearest CVITP program?
  4. What services will they do for you (if you are eligible)?
  5. What would you still need to do yourself to complete your income tax filing?

This is the dropbox icon. Assignment: The Community Volunteer Income Tax Program (CVITP)

Community Volunteer Income Tax Program (CVITP)

  1. Analyse the information you found by sorting the information into two lists, one titled "Pros" and the other "Cons".
  2. In the "Pros" list, include any information that you found that can be viewed as the positives about the CVITP?
  3. In the "Cons" list, include any information that you found that can be viewed as the negatives about the CVITP?

Unfortunately, Priya and Am were not eligible for the CVITP because their income was too high.

There are two more ways that individuals can get help with their taxes, but they sometimes cost money.

Priya and Am looked into these products and services.

Services You May Have to Pay For

Income Tax Preparation Software

Priya found a great video on the CRA site. It described exactly what she needs to know about Income Tax Preparation Software.

Priya followed the CRA video instructions and found the list of products on the CRA site that are certified for the NETFILE* program. This was a great help!

The CRA site refers a lot to NETFILE. NETFILE is a service that allows most Canadians to use a NETFILE certified software product to electronically file their income tax and benefit return for the current year.

This is the enrichment icon. Enrichment

NETFILE is an electronic tax-filing service that allows you to send your individual income tax and benefit return directly to the Canada Revenue Agency (CRA) using the Internet and a NETFILE certified software product. It streamlines the tax-filing process and offers the following benefits:

  • It is secure and confidential.
  • You can file your returns directly from one of the NETFILE certified products available using the NETFILE web service.
  • There is no more need to upload your ".tax" file.
  • Refunds are issued faster (in most cases, with direct deposit, you can receive your refund in as little as eight business days).
  • It is more accurate (because the CRA doesn’t enter the information from your paper tax return, there is less chance of errors).
  • You do not have to mail a paper return.
  • You do not have to send in receipts, unless the CRA asks for them at a later date.
  • You get immediate confirmation that the CRA has received your tax return.

You can read more about NETFILE at the CRA website.

Priya and Am need the type of income tax software that will ask them prompting questions and lead them through the tax forms based on your answers.

Priya picks one of the free products that has the auto-fill feature. When she goes to their site, she is taken through a questionnaire that helps her choose the right version of the software.

Many tax software sites will ask you questions in order to determine what type of software is right for you.

Priya likes what this Standard version seems to offer. However, she finds that the same company sells their Standard version tax preparation software in stores. When you purchase the CD, you can file up to eight individual returns. The software costs $29.99.

Priya makes a note: The software she wants in an online format will cost about $40 for both her and Am. The same software on CD will cost $30 for the version they need.

This is the dropbox icon. Assignment: Tax Preparation Software

Summarize the information about the two Standard version software options (download or purchase the CD) by sorting the information into two lists, one titled "Pros" and the other "Cons."

In the "Pros" list, include any information that can be viewed as positive about paying for the Standard version software (either option).

In the "Cons" list, include any information that can be viewed as negative about paying for the Standard version software (either option).

Income Tax Preparation Providers

Am has found out that there are many tax preparation providers in their community. One of their friends has told him to check carefully because not all tax preparation providers are CRA approved.

Am found a list of questions that he could use to help him decide if a service was right for them.

Long Description

This is the did you know icon. Did You Know?

EFILE is an automated service that approved tax preparation service providers must use to send individual income tax return information to the Canada Revenue Agency (CRA) directly from EFILE certified tax preparation software. Taxpayers may take their tax slips and supporting documents to a registered tax preparer. For a fee, the tax preparer will prepare their return and send it to the CRA electronically using EFILE.

Am learns that the way income tax service providers get paid depends on the types of services they provide.

Some income tax service providers charge a variety of pre-set fees that are based on the specific different services they offer.

Others charge an hourly rate, so the cost will depend on how long it takes to complete the service you want.

Am summarizes what he found for Priya:

Accounting Firms Tax Preparation Services
Cost
$150 - $400 per hour
$85 - $160 per couple
Estimate of total cost before committing?
Yes, but not guaranteed
Yes
Tax planning advice available?
Yes, up to 30 minutes total
No
Explanation of completed tax return?
Yes, up to 30 minutes total (with tax advice)
Yes
Income taxes filed with CRA
Yes, electronic filing
Yes, electronic filing
Ongoing support if CRA has concerns?
Yes
Yes
Tax planning advice during the year?
Available, but for an extra charge
No

Am would prefer to have the service of a tax advisor, but isn’t sure that it is worth the extra cost.

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