Finding the Right Canadian Tax Software: The Top Tips

As the pandemic disrupted the workforce and people’s livelihood, filing taxes has also changed.

However, paying taxes can be confusing as many people don’t understand taxes well. Thus, tax software can help us file taxes easily with better comprehension.

This article will guide you in choosing the perfect software for you. Let us look at various tax software available for taxpayers.

1. What Is Tax Software?

Tax software helps taxpayers in preparing and filing income tax returns. By visiting no-tax offices, you can get information about your income tax returns in the comfort of your home.

The primary purpose of this software is to automate your process and perform the procedure manually. You can be up-to-date with tax rules and regulations, saving your precious time and money.

If you aren’t familiar with taxes or find them hard to calculate, tax software makes it manageable and simple for you. All you have to do is enter your tax information on relevant tax forms. The software will then calculate the tax you need to pay and the refund you can expect.

Tax software may eliminate the idea of hiring a professional to guide you. Softwares like these are aimed at non-tax professionals, which they can find easy to use.

2. Why Use Tax Software?

Why take the time to fill out different forms and pound on the calculator to get the correct tax amount when you can file tax returns online? These are some reasons you should use tax software:

1. User-Friendliness: Tax Software guides you through the filing procedure and avoids typical mistakes. They are designed to make it easy for an average taxpayer to understand.
2. Affordability: Costing $50 or less, tax software has many features to choose from and files your federal tax for free. A qualified tax professional or CPA will cost you double the amount you pay for tax software. Providing in-depth service, tax software can save a lot of your money.
3. Saves time: While going to a tax office may take more than an hour, combined with long queues, tax software saves much of your time. Tax software can quickly file your taxes if you have the papers ready. Most require less than half an hour to file your tax return. In contrast, a professional accountant may take several days to weeks to process your documents.

Most tax experts agree that tax software is efficient and safe for an average taxpayer.

3. Why Go For Tax Filing Online

The majority of Canadians  filed their taxes online in 2020. Still wondering what other benefits you can earn while filing taxes online? Here are some advantages a taxpayer can benefit from:

• Filing taxes online results in a much faster process than a paper-filling method.
• Filling a form while applying for tax is very important. One needs to make sure there are no errors in the form, as it may cause your tax procedure to get delayed. Tax software minimizes errors on your form and ensures a smoother process.
• One of the biggest advantages of online tax filing is applying for it anywhere and anytime. You can use any gadget, including a mobile phone, PC, or Tab, to file your returns online. The software is accessible to anyone, 24/7.
• Privacy is essential, and tax software ensures the confidentiality of your data.
• Have you ever misplaced your old documents, which led to a delay in filing taxes? Tax software can avoid this from happening as it secures your old and the uploaded database.
• Tax software gives reassurance as it promptly provides an E- receipt once you have submitted your returns.
• While paying your tax on time by tax software, you can avoid late payment penalties. The software ensures you complete your procedure before the due date.

4. Things To Look For In Tax Software?

Tax software is available for everyone, but selecting the right one for you can cause indecisiveness, as plentiful options are available. Keep these tips in mind while looking for tax software:

• Tax software and their system differ from one another. Many include the Free, Deluxe, and Premium versions. These do not share the same features, as many versions may have additional perks. You can always opt for the basic version if you are a basic taxpayer.
• However, if you find yourself in doubt, you can buy the premium, ensuring you receive all the features you will need.
• Some tax software includes the state return price, while others charge separately.
• Your tax software must offer a ‘tax deduction finder’ feature that digs up deductions you may not realize were available.
•  Electronic filing fees may apply to certain software, but they are often charged separately.
• If you opt for the filing fees, research its price. Otherwise, you can always print out and mail your tax returns.
• Always ensure a helpline or chat box is available in the tax software to assist you with any problems you face.
• A good tax software provides an email id, toll-free number, or an online forum. Ensure any additional fees you might have to pay while asking a tax professional for help.
• Make sure the tax software you choose must be NETFILE Approved. NETFILE is a service that directly sends your tax returns to the Canada Revenue Agency (CRA) safely. Once the CRA receives it, you will be notified.

5. Tax Day: The Top Things To Be Mindful Of

It is finally the day you file your taxes. If you feel nervous and all over the place, just keep these few things in mind:

5.1 The Tax Software Interface and Process

Every tax software has a different Interface and process, depending on different taxpayers. Software that may suit a simple taxpayer may not be correct for a business owner.

Thus, one must thoroughly read the description of every software program. Depending on the price and features, it must provide maximum benefits to the user.

There are two types of interface found in most tax software:

• Form-Based – This type of interface imitates the layout of several tax forms and documents. Like how you fill out the form, the software allows you to fill the information in the correct boxes.
• Interview-Based – Interview-based tax software is commonly found and is the easiest to use. It is in the question-answer format to simplify the tax filing process.

5.2 Free Tax Services

Tax software offers certain services free, while others can charge you an unexpected fee. For example – a specific software may provide free services only to those whose income falls under certain criteria.

Others may offer only one year of free filing, and you may have to switch to another software. You may have to use advanced tax software features if you have a complicated tax situation.

Many of these advanced features are not free; hence, depending on the software, you may have to switch to another.

5.3 Protecting Your Privacy

The terms and conditions of every software can be tedious to read. Yet, always be mindful of the terms provided by a certain tax software as cybercrime is still prevalent.

Your passwords must be strong. You must always update your software and check for encryption.

5.4 How Online Tax Software Works

• Once you install the tax software, you need to accept the software’s terms and conditions.
• After that, a form or interview-based interface will be presented to you.
• When satisfied with all the answers, it will direct you to fill in your contact information.
•  The software will calculate and let you know any errors when everything has been filled in.
• The software transfers your tax data to the state you must file your returns.
• After checking your total return, you can pay service fees if mandatory.

6. How Do I Find The Easiest Tax Software To Use?

6.1 If You Are Overwhelmed:

If you find filing taxis overwhelming and stressful, the best tax software for you would be TurboTax and H&R Block. They efficiently perform the tax process and offer expert guidance if you need it. With their extensive and easy navigation, you must upload tax forms and answer a few questions.

6.2 If Saving Money Is More Important:

Credit Karma Tax is free software for federal and state returns if you want to save money. The H&R Block free version offers several features that can help you save money.

The higher tier packages of TaxAct, TaxSlayer, and Jackson Hewitt offer tax software for half the price. They provide a variety of useful features that can easily speed up your tax process and save money.

6.3 If You Care About A Big Tax Refund:

If you want a big tax refund, file tax returns with different online software. All the tax software mentioned above allows you to start a free tax return and pay only when you are ready to submit it. They let you see your tax refund amount before the payment is required.

You can cancel your filing application anytime if you aren’t satisfied with the refund amount.

7. How To Choose The Best Tax Software?

With so many options available, how can you decide which software is the right one? Many taxpayers face penalties, unpaid taxes, non-filers, errors in their calculations, being stuck with an audit, and under-reported income.

Many taxpayers face multiple issues, resulting in CRA charging hefty penalties.

To counter and avoid such problems, many tax software aims to solve these issues faced by users. Let us look at how you can choose the best tax software for 2021:

7.1 Stage Of Life

As your stages of life change, you will have to switch or upgrade for better tax software. You need to understand which software might benefit you while thoroughly researching it. For example, – An average taxpayer may benefit from one piece of software. The same may not be useful if you become a business person or an investor.

7.2 Free VS Paid

Tax software offers various versions such as Free, Deluxe, and premium. One company’s free or deluxe versions may not offer the same features as another company. How will you know which one suits you the best?

You should go for the premium version to get the best features. Although the features in this version will not be the same for every company, you will still have all the options available to file your tax.

However, if your tax situation is fundamental, you can always opt for the free version, efficiently completing the process.

7.3 Tax Credits

A Tax Credit is an amount that taxpayers can directly subtract from the taxes they owe to the government. There are other tax credits available for taxpayers. They save you more deductions and reduce your total tax.

Certain Tax software allows tax credits and minimizes your overall tax. The best tax software makes sure you get the deserved tax credits.

7.4 Not For Everyone

Not all tax software will be the correct one for you. You need to look at your tax situation to choose the right software. If it is a basic process, any of the software can help you with that. However, if it is a complicated process, you need to upgrade to higher versions or completely switch to new tax software.

For example- Credit Karma Tax is free and lets you file your basic tax returns with no charger. But, if you are looking for in-depth guidance and professional advice, you may need to switch to Turbo Tax or H&R Block, which provides these features.

7.5 Easy To Use

The tax software must speak your ‘language’ and provide a clear user interface. You need to see which software is equipped with your preferences – form, questionnaire, or interview-based.

Many tax software is straightforward to use and navigate, yet not all have the same features.

7.6 Mobile App

A good tax software must have mobile options such as a mobile app that users can access easily. While various software may provide you with an app, few don’t.

If you want to make your tax filing process easier and quick, choose software with a mobile app and sync it to your desktop.

8. Finding The Right Software For You

8.1 Best Tax Software For Student Loan Borrowers

H&R Block is perfect for those with Student loans or Education expenses. The most expensive version of H&R is still affordable for many students in Canada.

Credit Karma Tax is ideal if you are looking for free state and federal filing and looking for more deductions. Credit Karma Tax is also perfect for Student Loan borrowers. However, it may not be as efficient as H&R Block.

8.2 Best Tax Software For Cryptocurrency Traders

There is no other software perfect for cryptocurrency traders than TurboTax premium. For easy integrations with crypto wallets, TurboTax Premium is very useful. It imports your transactions and declares profits and losses.

8.3 Best Tax Software For Stock Market Investors

While almost every software benefits stock market investors, H&R Block Premium is time-saving and more efficient than other software. It allows users to upload their tax forms from brokerages and calculates their capital gain taxes.

TurboTax Premium is also matched with H&R Block Premium but isn’t as useful as the latter.

8.4 Best Tax Software For Landlords

Landowners face complicated returns, and keeping track of expenses and income can be exhausting. The software that calculates depreciation easily is the H&R Block Premium.

The software makes it easy to figure out and claim appropriate deductions. The instructions are written in plain language, and the in-built calculator in the software provides everything a landlord may need for their tax process.

8.5 Best Tax Software For Side Hustlers

Side hustlers have a relatively smaller income than small business owners. The ideal software for side hustlers is TaxSlayer Classic, which cheaply provides access to all forms. It is perfect for those who need a basic interface and no extra features.

Credit Karma Tax and H&R Block premium are also useful for side hustlers in managing their tax returns.

8.6 Best Tax Software For Small Business Owners

The perfect software for small business owners is TaxSlayer self-employed. It is affordable, has excellent functionality, and provides plenty of information to users.

9. Top Tax Software Choices For You

Here are some of the most well-known tax software you can choose from:

9.1 Turbo Tax By Intuit

Key Features

• In most circumstances, Turbo Tax helps you prepare and file tax returns
• It has a free version with various options available.
• Turbo Tax offers customizable Reporting, tracks your expense, and provides statistics.
• It also provides on-screen advice directly from credentialed CPAs.
• Provides self-help tools and much more.

Pros

• It guides you step by step through the process of your tax return.
• It allows you to talk to tax professionals about your tax return and let them review it.
• The navigation of the Tubo Tax is simple and easy to follow.
• Turbo Tax’s mobile app is available, which can easily sync to your desktop.

Cons

• Products on Turbo Tax are more expensive than most of the competing software.
• If you use your refund to pay, it will charge an extra fee.
• Your ultimate price to pay won’t be revealed until Turbo Tax completes the entire process. This usually depends on what features you used in the software.

Ideal For

• With its user-friendly software, Turbo Tax is ideal for an average taxpayer.
• It is good for those who have a small business or a startup.
• Turbo Tax is ideal for you if you have a complicated tax issue.
• If you are looking for more deductions, Turbo Tax can help you with that.

9.2 H&R Block

Key Features

• H&R Block has an Online Assist Program where you can talk to tax professionals such as CPAs and enrolled agents almost anywhere.
• It offers a refund bonus to customers who own an Amazon Gift Card. Instead of loading the refunds to direct deposits and other payment methods, you can load the desired amount onto the Amazon card.
• H&R Block offers four editions of their online software: Free, Deluxe, Premium, and Self-Employed.
• It supports most of the tax forms and guarantees a maximum refund.
• It promises to provide accurate calculations only.

Pros

• H&R Block is easy to use and helps you find the right service through a series of simple questions.
• It commits to transparency by giving detailed pricing information, unlike other software.
• H&R Block is affordable and versatile, offering various options for filing taxes.
• It provides multiple refund options such as depositing it in your bank amount or Amazon Gift Card.
• Has handy features such as a donation calculator and mobile app.

Cons

• Although H&R offers an advanced tax refund, it comes with an annual fee and an interest rate.
• The free and low-priced plans in the software cannot handle complicated tax issues.
• If you want additional services, you will have to pay extra fees to access them.

Ideal For

• Students are looking for a free filing option.
• Those who haven’t filed their taxes wish to have clear explanations of the tax process.

9.3 Jackson Hewitt Online

Key Features

• Promises a guarantee on a maximum refund.
• The software’s level of accuracy and assistance is top-notch.
• Offers an easy tax filing process.
• It has a mobile app that everyone can access anywhere and anytime.

Pros

• Jackson Hewitt has reasonable pricing.
• It provides comprehensive interview options.
• It has good error-checking.
• People can navigate the online interface easily.

Cons

• For different tax circumstances, the pricing for different options may be higher.
• Jackson Hewitt does not offer any audit support.
• It offers less customer support help, as you may have to visit their office instead of chatting or talking to a professional online.
• It cannot solve very complicated tax situations.

 Ideal For

• For in-person tax preparation, Jackson Hewitt is best.
• If a person wants to file multiple state returns, this software lets you do it easily.
• Self-employed filers who are willing to pay for the expensive options.
• Those desiring to file taxes in person have many physical offices for Jackson Hewitt.

9.4 TaxSlayer

 Key Features

• The interface of TaxSlayer is easy to use.
• It provides handy features such as a donation calculator and platform mobility.
• It offers various options for support, like general guidance, tech support, and one-on-one tax help.
• It provides certain business features.

 Pros

• Let’s you file simple tax returns for free.
• Affordable add-on fee for state returns.
• One of the most budget-friendly DIY software.
• Provides military discount while filing federal taxes.

Cons

• Live chat for TaxSlayer is not available for all versions.
• Audit Support is fundamental and costs extra for Free, Classic, and Premium users.
• It does not provide a price of what you might end up paying.
• Getting help from tax professionals is very limited.

 Ideal For

• Someone who is confident about tax filing and does not need much help in the process
• Tax returns to get done at a low price.

9.5 Credit Karma Tax

Key Features

• A completely free tax filing software where users can file state and federal taxes.
• Guides users through a questionnaire.
• Supports most forms and schedules.
• Offers accurate calculations for users.

Pros

• Credit Karma Tax is fast and free.
• Easy to use interface and offers quick navigation.
• It has a mobile version making the filing process easier.
• Your data is encrypted in the Credit Karma Tax.

 Cons

• I cannot notify you of any errors.
• Does not provide expert tax help.
• You can’t import certain data, such as your investment data.

Ideal For

• I am looking to file taxes with no expert help or advice. Users like a simple interface and wish to save money on tax preparation.
• Those are looking for basic tax forms.

9.6 TaxAct

 Key Features

• Provides multiple refund options.
• Has access to PDF import.
• You can create your personalized form through this software.
• Has a tax glossary with 300 helpful tax terms.

 Pros

• Affordable for small business owners.
• Provides several low-cost products.
• Has a screen sharing option.
• Offers multiple refund options.

Cons

• Does not provide Audit support.
• Customer Service isn’t as accessible as other competitors.
• State Returns cost more in TaxAct once you reach a certain level.

Ideal For

• Those who are looking for a good value in tax software
• A confident user who requires little guidance about preparing their taxes.

Frequently Asked Question

1. What is the best tax software for 2021?

According to CNBC, the overall best Tax software of 2021 is TurboTax. TurboTax is Canada’s best-selling software due to its well-rounded features.

2. When is my 2020 tax due in 2021?

The tax filing deadline for Canadian taxpayers is April 30, 2021, for the 2020 tax year. For those who are self-employed or have a self-employed partner, their deadline extends till June 15, 2021.

3. What happens if I miss my tax deadline?

The CRA will charge you a late-filing penalty if you miss your tax deadline.

4. If you don’t usually file a tax return, do I need to take an extra step? 

If you don’t usually file a tax return, it is against the law. The CRA can charge you with late filing penalties and interest charges on the tax debt you owe.

The longer you wait, the more the penalties and interest will increase. Since the CRA is a powerful agency, they will be notified immediately if you don’t file your tax returns.

5. How do I maximize credits and deductions?

To maximize Credits and Deductions, you need to calculate your taxable income. Then, lower it by using as many tax deductions and credits as possible.

While a credit minimizes the tax you owe, deductions reduce taxable income.

6. Should I pay someone to do my taxes?

You should only pay a tax professional if you have a complicated tax situation or want someone to guide you. This is when you should pay someone to do your taxes:

• Your income is $200,000 or above per year.
• You experienced a major life event, such as marriage or divorce.
• You start a new business.
• You have complicated investments, like a partnership.

7. Filing Taxes amidst COVID Pandemic

Here you can find the extensive rules for Canadian residents filing taxes during the pandemic. Several tax filings and payments have been extended. You can find more information on deadlines in Appendix A.

8. How much does it cost to have someone do your taxes?

If you want to itemize your deductions, it may cost you $294, including state and federal returns.

If you are not looking to itemize deductions, you can expect to pay $176. Depending on the complexity, the most basic tax returns can cost $60 to $1000 in Canada.

Remember that these average costs may differ if your tax returns come under special categories and take longer than expected for the accountant to complete.

9. How do I find the best value tax software for me?

Looking at the accuracy and maximum benefits you can get from tax software is important. They should suit you and provide only the best feature according to your preferences.

Closing Thoughts

Whether you are dealing with medical expenses, capital gains, rental income, income taxes, your own taxes, or any other tax scenarios. You can effortlessly manage all with best online tax software; It includes free tax software options like netfile certified tax software or even other professional online tax services.

So, what are you waiting for? Prepare for your upcoming tax season and file taxes online with the help of some good Tax software.

Last Updated on July 17, 2023 by Priyanshi Sharma