No one, except perhaps accountants, enjoys preparing their taxes. Now is the time of year when clients frequently talk with their financial advisors about taxes, and while advisors can’t make tax prep fun, there is software that can ease the pain. When your clients complain about the paperwork involved in preparing their taxes, help them consider their options. A little friendly, informed advice goes a long way.
Some tax software, such as SimpleTax from SimpleTax Software Inc., is free. The company asks for donations after taxes are filed, but payment is strictly voluntary. Other companies have a “freemium” model, providing base functionality free of charge, with fees assessed only for the use of bells and whistles.
In many cases, the free versions are useful for basic personal filing, while the premium versions expand the scope to small-business owners. H&R Block Canada Inc. offers a free software package along with a premium version that includes tax tips and SmartReview, a feature that visually breaks down exactly how the user’s taxes were calculated.
UFile, from Thomson Reuters, offers a free online filing service for those with under $20,000 of family income, or for post-secondary students and first-time filers. For everyone else, pricing starts at $22.95.
UFile is a Windows-based product with a web-based option. The majority of software products that we found support Windows, but Mac users still have some alternatives. TaxFreeway from Entropy Technology Ltd., TaxTron from TaxTron Inc. and Intuit Inc.’s TurboTax are available for the Mac OSX operating system. If your client uses an iPad exclusively, then TaxFreeway, TurboTax and fastneasytax (from fastneasy services inc.) are worth a look.
There also are some web-based options for cross-platform compatibility. AdvTax (Aclasssoft Inc.), EachTax (Xinfo Technology), SimpleTax (Simpletax Software Inc.), Tax Chopper (Cute Tax Inc.) and WebTax4U (MacroNT Inc.) – like UFile – all offer a browser-based interface. In some cases, that’s all they offer.
EASE OF USE
Platforms aside, if your client breaks out in hives whenever someone mentions paperwork, then ease of use will be near the top of your list of priorities for tax software.
The best thought-out tax software uses a step-by-step introduction process that includes an interview to help the user describe his or her financial situation and input their specific details. Most of the products mentioned here offer this feature to varying degrees, and some even include videos to help explain the process.
DEDUCTION OPTIMIZATION
Ease of use should go beyond an easily navigable interface. Look for features that make your clients’ taxes themselves easier to calculate properly. Deduction optimization, for example, parses the user’s tax details and then searches through a database of possible tax deductions.
Deduction optimizers are common, but by no means ubiquitous. Products that offer this feature often support familial tax filing so that spouses can take advantage of joint benefits and income splitting.
Some software offers deduction optimization under various names. H&R Block calls its version SmartSearch and offers it as part of its free tax-filing service. FutureTax (Futureca Corp.) offers a variety of optimizers for split pensions, charitable donations, medical expenses and dependants.
NETFILE SUPPORT
Support for NETFILE, the service that enables clients to submit their taxes to the Canada Revenue Agency (CRA) over the Internet, is widespread among both free and paid products. Not all NETFILE support is the same, though.
Software can support a range of options for electronic filing, including support for the T1135 foreign income verification statement.
UFile is particularly useful for clients with foreign income. Over the past few years, it has offered average exchange rates from a drop-down menu directly in the software, eliminating the need to search them out at the Bank of Canada site.
Another optional feature is return auto-filling, which fills out some parts of a tax return based on previous and current data that the CRA has on file. This is something that you should be recommending, because auto-filling software generally imports documents such as T5 investment income slips.
Clients with more complex tax situations (typically high net-worth individuals) may also seek support for the CRA’s ReFILE service, which enables clients to make electronic adjustments to their return via their tax software.
Express notification of assessment (NOA) is another feature supported by many tax programs. Express NOA enables the CRA to deliver notice of assessment summaries complete with assessed refunds or balances owing directly to the software.
While support for these features is pretty ubiquitous, there are some omissions. For example, Windows-based FutureTax doesn’t support auto- filling. The fastneasytax software for iOS doesn’t offer T1135 capabilities and, like FutureTax, only supports ReFILE for financial year 2018. Visit the CRA website (canada.ca/en/revenue-agency.html) for a full list of software and supported NETFILE features.
SECURITY
Your clients should be eager to protect their data both from attackers and from accidental erasure. Some tax software backs up data to the cloud, TurboTax being a good example. This makes first-class account protection even more important.
Multi-factor authentication is a valuable security feature when accessing online data. This feature uses a second device (typically your smartphone) to verify your identity when logging in, making it harder for attackers around the world to impersonate you with a stolen password. TurboTax supports this feature.
GETTING HELP
At some point, clients may run into tax questions and need extra help. TurboTax includes an option for personal tax advice from a live expert. This service costs $79.99, or $99.99 for self-employed users.
TurboTax also offers an Audit Defense package for both individuals and businesses, providing an expert to assist you with queries should the CRA come calling. H&R Block’s Protection online service offers a similar feature.
There are other features for clients to consider when choosing tax software. Clients who are a little behind in their taxes should look for multi-year tax-filing support, for example.
If your client is seriously allergic to tax forms but doesn’t have an accountant, they can pay Intuit $200 or less to have an expert to prepare and file their taxes for them. The company even offers this option for self-employed clients.