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.
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?