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Take the taxing part out of filing

Software that help you stay in the Canada Revenue Agency's good graces has come a long way

Globe and Mail Update

kapicalabiconThe Canada Revenue Agency has announced triumphantly that about half of Canadians are now filing their personal income taxes electronically. But the CRA doesn't break down how many of these forms are filed by professionals.

The distinction is important; without knowing the breakdown it's difficult to tell whether the available software packages and on-line services are really helping ordinary people in their alchemical quest to transform tax returns into gold.

Still, the popularity of tax software continues to grow. A quick count shows about 15 installable tax software packages or online services for Canadians who want to take charge of their personal fiscal responsibilities. They all follow the Canadian Tax Act scrupulously — they must — and do this by simply pasting your numbers into the appropriate places on the T1 form.

What sets them apart is the amount of help they offer, the levels of guidance for maximizing returns and the ease of navigation around the return form. Some include extra features, such as a module that plans for retirement or advice on managing investments. The software makers also jockey among themselves for market position by defining how many tax returns you can use the software to fill out — stay away from tax software that doesn't allow for spousal returns.

It's interesting how many online services there are now. Doing taxes on-line is a great benefit for non-Windows computers, but it also demands a lot of trust. All on-line tax-prep sites store your income information and other sensitive data on their computers; they're all bound by federal privacy laws, but that might not be enough assurance for some people. For what it's worth, however, there have been no celebrated stories of hackers breaking into online tax-prep databases.

The top Canadian packages for individuals:

QuickTax, Intuit Canada:

By far the slickest and most popular Canadian tax-prep software, QuickTax boasts an extensive and comprehensive help system, which offers the cushiest ride while filling out the forms.

A tabbed window at the right of the screen is designed to anticipate your questions ("Why should I register with Elections Canada?" "How much is the Ontario Sales Tax Credit?"), while offering a chatty interview setup process called EasyStep that addresses you by your first name, which is nice, but it's still an unsettling familiarity. For experienced tax filers there's the Forms Method, more like the old, paper-based way of tax wizardry. And users can also switch easily from one system to the other.

Clicking on a question opens up a clear dialogue box; some other programs are programmed to use Windows' built-in help function, which is a good way to explain software and a bad way to explain tax law. And at times during the interrogation process, QuickTax offers "Smart Tips" on how to maximize returns, or warnings if you've tried to do something the CRA frowns upon.

The EasyStep way offers an interesting feature: As you answer certain questions, you can see your answers being fed into the image of the T1 General 2006 form in a window at the bottom of the screen. So if you have trouble with Intuit's way of explaining things, you can go back to the government way.

I was most impressed when QuickTax caught a typo in my Social Insurance Number — I don't know how it knew, but it did. It was a little spooky, actually.

QuickTax comes in three flavours:

QuickTax Platinum ($59.99) will handle just about any level of complexity in your financial picture, including stocks, bonds, mutual funds and RRSPs, as well as a Retirement Income Planner to lay out strategies for a future after retirement, a Paycheque Optimizer that shows ways to reduce tax withholding and a Canada Pension Plan Sharing Optimizer that demonstrates how to split CPP income to maximize tax advantages. It can run multiple tax scenarios, analyzes capital gains and incorporation.

Your license permits you to prepare five tax returns where the taxpayer's net income exceeds $25,000. You can prepare an unlimited number of returns where the taxpayer's net income is $25,000 or lower.

Quicktax Standard ($39.95) has everything the Platinum version has except the retirement planner. It can also be installed on two computers and file five returns. Like its big brother, it handles relocation for a new job, a death in the family, marriage and divorce or the arrival of a new dependent.

QuickTax Web (free to try, $19.95 for each return): Intuit's online version, offers the same services as the standard package, and will reimburse you plus interest if you pay a penalty due to an error in QuickTaxWeb. (this does not include calculation errors on CRA tables). Intuit also offers a refund if you're not satisfied with the product within 60 days of purchase.

TaxWiz, Intuit Canada:

TaxWiz was purchased by Intuit Canada a couple of years ago, and is being sold as its bare-bones product. It does have several sophisticated features, though, such as running what-if scenarios, multiple filing options, (you can prepare up to six income tax returns) and offers popup help. Unlike QuickTax, there is no corporate version.

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