Working On My 2009 Tax Return – Pep Talk To Me

by Mike Holman

It’s that time of year when I get to do something I really don’t enjoy doing – my taxes.  I’ve concluded that the main problem with taxes is not the form filling but rather the book keeping.  I’ve improved my record keeping system over the last year but it still needs some improvement.  My taxes are a lot more complicated than they used to be so that is also part of the problem.

I had toyed with the idea of using an accountant this year but decided against it since I couldn’t be bothered to find one and I also decided to splurge on QuickTax tax software which so far is making things a lot easier than in past years.  I’ll be doing a proper review of QuickTax next week, but so far I like it a lot.

Why are my taxes so complicated?

They aren’t really – but gone are the days when I used to just have a T4 with my income and a few deductions (taxes, employment insurance, CPP) and a couple of RRSP contribution receipts.  I still have the T4 and the RRSP receipts but I also have a few other things.

Taxable investment income/investment loan and capital gain

Until late last year I had a leveraged investment plan in place which means that I need to declare any dividend income from the investments as well as write off the interest on the investment loan.  This is complicated by the fact that switched from RBC Direct to Questrade last year.  Because I sold all the leveraged investments last year, I need also figure out the ACBs of all the stocks to determine how much capital gain there was.  The good news is that this is the last year I need to do this since I collapsed the leveraged plan.

Home Buyers Plan (HBP) loan repayments

Ok, the accounting for home buyers plans loan repayments isn’t very complicated but it is one more thing than I used to do before owning a house.

Small Business

My business which consists of this site among others makes up the bulk of the work for my taxes.  As a sole proprietorship business it is surprisingly easy to do the taxes for it but the book keeping is another story.  Last year I totally revamped how I kept track of my expenses and income by using an income/expense  spreadsheet inspired by Finance Freelance Life.  I’m going to be experimenting soon with QuickBooks to see if that helps a bit as well.

So that’s my tax story so far this year – has anyone else started their taxes yet?  Using an accountant?  Planning on doing some major cheating? :)

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{ 8 comments… read them below or add one }

1 2 Cents @ Balance Junkie

I have only just begun our taxes. We have used an accountant for a number of years, and will do so this year too. (Using an accountant doesn’t make the book keeping any easier!) Our taxes will be a little less complicated next year, so I’m going to give it a try myself. I was going to use Quick Tax, since I already use Quicken, but I’ve heard that U-File is just as good and a bit cheaper.

In terms of tracking your business, you can also use Quicken Home & Business. It’s not as detailed as QuickBooks, but it works great integrating home and business finances. If you have a few businesses or your business is more involved, however, I guess QuickBooks or another true accounting software is the way to go.

2 Four Pillars

Thanks for your 2 cents! :)

I didn’t really look at different alternatives for tax software – just made a decision.

Quickbooks has a free edition which I’m hoping will be enough for my needs. If not I may buy a better version. I haven’t tried Quicken but I’d like to review it here sometime so I will give it a try as well.

The business taxes are not involved at all – what I really want is something similar to a personal expense tracking software where you can download your bank/paypal info then the program can report on all the income/expenses and do reports by category (which I will have to set).

3 The Rat

I start my tax planning at the beginning of each year, but its more of a traditional approach. I file everything by a paper system in a briefcase-style folder system that has folders such as Travel (for travel expenses) Taxes (for my T4, T5 slips, etc.), Medical, etc. (you get the idea)

As of now I don’t use any software for tax tracking purposes (I do for my investments) as everything has its place and when tax time arrives, I take everything out, put them in order and pass them on to my accountant.

I think the most important thing is to know where taxes can be save. For example, my wife and I renovated our bathroom before Jan 31, 2010 and we know that we qualify for the tax renovation credit. As a result, we have a specific folder for this credit with all the expenses we incurred during this process.

The leverage plan you had last year could certainly cause more work for you, especially where you have other investments that are not leveraged and I can imagine how that will be a thorn on the side to work out.

Nice thread.
The Rat

4 Financial Cents

Hey Mike,

Yeah, started my taxes, but I’m only in what I call “the organization stage”. I’m still waiting for some documents and receipts to come my way, but that should happen over the next month. By late-March, I’ll run our numbers in QuickTax like I always do. Things aren’t too complicated for us; we sold a rental property, have some T4s, T5s, RRSP receipts, make chartiable donations and have the home reno. tax credit to look forward to. All of this is quite manageable with QuickTax without an accountant, just takes some careful thought and review. Good luck with yours, ’tis tax season!

5 Four Pillars

The Rat – you sound pretty organized. My leveraged investments were kept separate from non-leveraged investments so there was no problem there.

Financial Cents – good luck with your taxes – thanks for the QuickTax vote of confidence.

6 The Rat

@ Four Pillars: Thanks! I’m sure you have your ‘ducks in a row’. Just the fact that you know how to claim interest on funds borrowed for investments is sufficient enough to realize you’ve got your tax situation well-thought out and in advance.

7 Mike

Rat – Well, I have done the interest deduction for the last 2 years so yes, I know how to claim it. The trick is remembering exactly how I did it. :)

8 Kathryn

QuickTax is great.

I’m such a nerd. I love doing taxes. In fact, every year I take my birthday off work (it’s in March) and my Dad and I spend the day together doing our taxes. We take a break and go out for lunch. It’s probably not so much the love of doing taxes but the satisfaction that comes with having them done.

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