Q: I have always had my personal income tax filed by a local tax company. The tax company opens for two months during March and April in a mall close to my home. Most years, the tax assessment agrees with my filing. How do I know if I am maximizing my tax deductions?
A: You don’t! Personal income tax, not unlike a business, may require little tax planning or more sophisticated tax advice. A large conglomerate such as RBC would not seek tax advice from a small independent accountant nor would a local variety store seek the services of a large accounting firm. Personal circumstances will dictate the level of service an individual requires.
Larger tax service companies with multiple locations serve many employed individuals. Generally, their tax preparers are trained for several months before dealing with consumers. However, you do not require a license to lend yourself out as a tax preparer. Be cautious of preparers advertising fast service and a cheap price.
Tax preparation is not about how many “slips” you have but avoiding “slip ups.” Slip ups are not knowing the right questions to ask that are not on a T-slip. Generally, taxpayers with investments such as stocks, real estate rentals businesses, and estates will require the services of a qualified accountant or tax adviser.
However, any tax adviser should spend time with you and ascertain your specific circumstances.
I have received several questions regarding the new Canada Employment Credit. This credit is available to most employed taxpayers and can be claimed on Schedule 1, Federal Income tax schedule. As this credit was introduced beginning July 1, 2006 the current year’s claim is $250. In 2007, the claim increases to $1,000.
Henry Choo Chong, CGA provides accounting and tax services to individuals and businesses in the GTA. He can be reached at 416-590-1728, ext. 304. Any questions to Money Matters should be e-mailed to email@example.com.