Doing Your Canadian
Federal and Quebec Income Tax


Updated for 2020 Tax Returns

This document discusses the various ways of doing your Canadian Income Tax. There are over a dozen CRA certified tax software providers. Quebec Income Taxes can be handled in a similar fashion. Pricing examples refer to the popular TurboTax products in effect November 2020. Consult their web site for current prices. (Note TurboTax was called QuickTax prior to 2011.)

COVID-19 Considerations

If you received compensation from the various COVID-19 programs then there may be tax implications. The various software packages below are expected to have added support to help you by January 2021. Currently the Canadian and Quebec Revenue web pages mentioned below already have COVID information.

Some Keywords to Know

CRA Canadian Revenue Agency. These are the people who collect and process your Federal tax return. Their web site is canada.ca/en/services/taxes
Revenu Québec Revenu Québec. These are the people who collect and process Québec tax returns. Their English web site is revenuquebec.ca/en
NETFILE CRA electronic tax filing service that allows you to file your personal income tax return directly to CRA using the Internet. (There is a NetFile Quebec site that is similar in function to the CRA's version. Quebec online filers will need to use both sites as directed by the software packages.)
Download What is downloading? Think of the Internet as located in the sky or clouds and therefore downloading means copying information down from the sky. Uploading is when you send information to the Internet.) Downloading software from the Internet means that your computer is fetching the software from the Internet and copying it to your computer. This allows you to subsequently run the software on your computer without being connected to the Internet. Compare with the term "Online" described below.
Online A computer is considered Online when it has an active connection to the Internet. This online connection allows the computer that you are using to exchange information with one running at a remote site such as Google.com. For example, an online connection to the TurboTax site allows you to enter and process your tax information without having to install any software or make any changes to the computer you are using. You can even stop the online connection and reconnect online to TurboTax at a later time from another computer to continue your tax returns.
Web Browser Just about every computer and cell phone comes with a Web Browser. It is the application you use to connect online with Google, TurboTax, etc. The application may be called Microsoft Edge, Internet Explorer, Chrome, etc. The web browser's main job is to format text, pictures, and links to remote sites so that they display nicely on your display screen.

Your Basic Choices

  • Use the paper forms supplied by the government
    • Not a good option. So many ways to make errors. You will also need to send all your receipts with your paper return via mail or hand it in at a government tax centre. Even the government prefers you do not use this technique. (It increases their workload, their warehouse storage requirements as well as the need to correct arithmetic errors and clerical errors you and they may make entering your information.)
    • Quebec tax filers will need to complete a Quebec return in addition to the Federal one. The two returns are different enough to cause even more errors in completing them.
  • Use a tax service to do your return
    • May be useful for complex returns of self-employed people but usually an unnecessary expense for salaried employees. Harder to find someone to do it as tax deadlines approach.
  • Use a tax program on your computer to enter, verify, and help you every step of the way
    • The most versatile choice. It allows you to do a few returns at a low cost per return with fast consistent response times. Allows immediate submission of return for faster refunds. Sample price is $19.99 (basic} for 4 returns, $34.99 (standard) up to 8 tax returns. (Husband and wife returns counts as 2.)
  • Use a web-based tax program to enter, verify, and help you every step of the way
    • The cheapest way to do a single tax return. Don't have easy access to an Internet connected computer at home? Then use a web browser at a library or Internet cafe. Sample price is $14.99 per completed tax return and free to try.

Why Using a Computer is Better

  • The computer will help you enter your information, check it, and do all the math.
  • If you need to also file a Quebec tax return, the tax programs will handle this with ease.
  • You can submit the tax return directly from your computer to the government's one. This process takes only seconds. No need to print anything, or send in any slips of paper. (The CRA calls this submission process "NETFILE". Quebec tax filers can also directly submit their Quebec tax return to "NetFile Quebec".)
  • Any tax refund processing will be processed sooner since the government gets all the information they need in their format and they know it has been checked over by a tax program they have certified.
  • If you owe taxes, you can pay them at any bank or by using online banking using the same way you pay your utility bills. The payer name is "CRA Payment on Filing". (The other name called "CRA Instalments" is for people who pay taxes in instalments throughout the year as directed by the government -- not the same thing.)
  • Do you think an audit of your computer submitted return is more likely since you have not sent in any slips, etc? Not true! The same criteria for reviewing income tax returns are used for both paper and electronic versions.
  • Just remember:
    • Best to file your taxes on or before the deadline of April 30. Early submission will allow you to get back any refunds earlier.
    • If you miss the deadline, you can still use NETFILE until the end of September. After that date you can still use the computer programs and may have to print out your completed forms and submit the paper forms plus all the tax slips and receipts with it.
    • CRA will not allow you to submit more than 20 computerized tax returns using any program. This is meant to avoid people using these programs commercially. Most tax programs require that you pay slightly more if you do more than 8 returns.

Store-Bought Tax Programs

Many people buy their tax software from a store for about $35. The software comes in a box that contains a CD-ROM disk and not much else. When you install the tax program it will ask for an Internet connection to get the latest version of the software from the Internet. This is because the CD was created before government(CRA) has certified the program. (The certification usually takes place by the end of January.) Note many modern laptops do not come with CD-ROM drives built-in. So getting the CD-ROM version would require you to buy an external CD/DVD drive that attaches to the computer's USB port for about $50 from Best Buy, Staples, Amazon, etc. [As aside, your new external CD/DVD drive with its included software can play prerecorded videos and allow you to record your own CD/DVD disks for backup, etc.]

Directly Downloaded Tax Programs

It is usually faster and more convenient to download the tax software from the web than buying the software from a store. This may not sound logical but it is true. The boxed version you buy at the store is not the latest version of the software and probably will not even let you file a tax return. You will need to install the software from the CD in the box and then connect to the Internet to get the latest version. So why not bypass that step and get the latest version directly from the Internet and avoid the intermediate steps of working with a CD. Information on popular downloadable and Online tax programs from TurboTax. They all include Absolutely Free Live Tax Advice 24/7.

Running Online using the Web

It is possible to prepare and submit you taxes online using only a Web browser. No software to install on the computer and will work on public computers available at a library or even at the office. If you have only one or two tax returns to do this may be the least expensive method. You do not have to complete your taxes during one online web session. Click here to try TurboTax Online filing for FREE with Free Live Tax Advice included!
Many students can prepare and file their taxes entirely for FREE using this method. Click on the above link for more details.

 


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