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Taking the trauma out of the tax return

Tax Time

Yes, it’s that time of year again…cue music – “It’s the most wonderful time of the year”

I’ve said it before and I’ll say it again: Nobody enjoys doing their taxes. Although, personally, I like one thing about this time of year: I get to visit with people I wouldn’t otherwise see. I may not see them outside of taxes, and I like to keep up with them.

We’re also honoured to see more new clients each year – and delighted that you keep coming back. Thank you.

When we meet a new client, we always ask how they did their taxes before. If they used a professional and have decided to switch, we don’t ask who – but we ask what made them move.
The answers have been illuminating, and we’ve built our tax season machine around them. So I thought I’d pull back the veil a bit.

Here’s what clients have told us they hate:

 

Not knowing what’s going on.

Tax stuff can be weird. Depending on your situation, we might shift income from one spouse to another. Or claim a deduction last year – but not this year. This is normally done for your benefit: to minimize total family taxes – or to stop you wasting a deduction this year if you would get much better benefit next year. [To be honest, our software normally suggests it. Then we review and decide.]

But it may not be obvious – and people hate it when they don’t know what’s going on. Especially where their money’s involved. “I just didn’t know what my last tax guy was doing.” Most of our clients are smart people and are capable of understanding as much as they want to. So…. if they want, we spend a lot of time explaining, and discussing options.

Sometimes, there’s nothing that can be done: it is what it is. For example: many of our US commuter clients got nasty surprises last year when they filed their Canadian returns. It was because they’d had a pay rise, courtesy of the exchange rate – which dragged them into a higher tax bracket in Canada. But…. in this case, we had the chance to plan ahead. Once warned, most of our clients chose to avoid that extra tax this year, by putting more into RRSPs.

Not all our clients care. But most people like being in control of their lives. Can’t blame them.

 

Nasty surprises

(1) But you told me it would be….

Some of our tax clients consistently get a refund. Others consistently have to pay. For others, it flip-flops around.

I learned – the hard way – never to tell a client what their number would be, before we’ve finalized our process. On that occasion, something came out in the final review which – unfortunately – turned what I’d thought was a small refund into a small amount to pay. The total swing was only about $500 – not huge in the big scheme of things – but I was embarrassed to make that call.

So…. bear with us. We won’t tell you the number until we’re done. We will be as quick as we can.

(2) You file your return, you get your refund and spend it – and then you get audited. And you get a bill.

We acknowledge that there are legitimate areas of judgment or interpretation, where CRA may disagree with us. And – also – that clients may not have the paperwork to back up a claim in as much detail as possible. Or they forget to tell us about an income slip. So sometimes, clients do get reassessed – and it’s a nasty surprise.

To address this risk, we do the following:

  • Review last year while we’re doing this year, and see if there’s anything obvious that’s changed. Any income slips missing?
  • Warn you if we think your paperwork’s not up to scratch, or we think you’re pushing the envelope on something.

(3) Your fee is how much?

We don’t like that conversation either. So we pre-publish our price tariff at the start of each year. It doesn’t fit every case, but we try to be transparent.

 

The process

Really. Who enjoys this stuff?

At the start of each tax season, we pull our process apart and try to identify every possible pain point for our clients, so we can eliminate them. To give you an idea, here’s what we changed this season.

  1. The “drop-and-run”
    A few clients (you know who you are) do what I call a driveby delivery. They’re in and out in 15 seconds. But….. that sometimes means we have to call them to get even basic info before we can get started. So… we have a VERY condensed list of the vitals. You’re not allowed to leave without it. But it’s less than a minute, and saves us calling you an hour later.
    We tried to capture this using an iPad, but found it was actually quicker using pen and ink. So we went back to old-school.
  2. The unexpected roadblock
    Sometimes there are things that can bring our work to a grinding halt. For example: if somebody has died, all the executors (not just one) have to sign the form to let us handle it. Or, if you are claiming employment expenses, your employer has to complete and sign a specific form T2200 – Click here for another blog post about this.It can delay things by weeks if we suddenly have to ask for these things later – and your boss is on vacation.So… we try to make these key risk-points very clear in our info request form. And the big stuff is on the list of vitals.
  3. Compiling the data
    Let’s say you’ve been driving around for business all year, and kinda forgot to keep a mileage log.Or….you have a large stack of receipts that you think you can claim. Somebody has to compile and add them up. It’s either going to be you or us.We decided it didn’t have to be either of us. So…. we’ve decided to find and offer apps that make it as painless as possible [Check out ReceiptBank and MileIQ]. Heck, you don’t want to pay us for adding stuff up. It just makes everybody’s life easier.

See you soon. Preferably not in the last week of April.

~Jules

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