2010 Income Tax

How do you know a person is really dull? They start their income tax on a Sunday night of a long weekend  🙂

Yep, that’s me. I looked into TurboTax and started using their software online using my MacBook. I haven’t paid them a cent yet (but expect they will bill me eventually). The online price of $39.99 was a far cry from the $99 version sold at Staples. Plus, I didn’t have to leave the house to start using it, nor install anything on my hard-drive.

I have to say, TurboTax is pretty easy to use. The only caution I’d pass along for those of you who want to try it, is save often. It’s not quite as intuitive as it might be, but it’s intuitive enough for me. I did get automatically logged out a couple of times (due to inactivity) and noticed my recent work wasn’t saved, and I had to do it again. I only did that a couple of times before I learned my lesson.

Normally, I like to do my taxes early. Over the last few years, I’ve paid professionals to do my taxes for me. A few years ago I shelled out $600 to one professional. Needless to say, I never went back to him again. When I looked shell-shocked over the price and inquired why my friend paid exactly half of what I did, he noted “I got you back a bigger return, so the cost is higher.” Buh bye.

The fellow I’ve been using over the last couple of years has been more reasonable at about half of that, and it includes the returns for my daughters (which take about two minutes to prepare). Since I’ve made a big purchase this year, I thought I’d go back to the tax software and try my hand. In the past, I found it easy to use, and I never got audited unexpectedly. Now that I’m recording a T4 (WeightWatchers) and business income and rental income, I thought I might be biting off a bit more than I could chew. So far I’ll have to say that I’m feeling great about TurboTax, the ease of use despite having a tax return that’s not so run-of-the-mill.

This year, because I have a new set of wheels in the driveway, and I’m keen to know where things stand, I wanted to get a head start and not rely on somebody else’s schedule to give me some idea about where I stand in regard to my 2010 tax bill. Most of my data is now stored safely in TurboTax.

Since I was self-employed throughout 2010, I haven’t yet paid the Government a cent in income tax. I’m not expecting a refund. The matter is – how much (or how little) can I pay. Throughout the year, I park money that’s earmarked for taxes and HST in a high interest savings account and TFSA. In 2010, as I was aggressively paying down debt, there were a number of months that I overspent. Each month I overspent, I worried that I wouldn’t have enough money parked for tax time.

Now that I’ve done the majority of the calculations, I can boldly say that I have the money to pay my taxes, and my final HST return. I’ll also have about an extra $1,000 to put toward my Line of Credit after it’s all said and done. I’m overjoyed about that.

TurboTax, however, is tempting me. The software has an RSP maximizer tool. This allows you to pretend you’ve made more of a contribution to your RSP and then see how it impacts your tax owed/refund. You can bet I’ve played around a fair bit with that tool!

If I contribute an extra $2,000 to my RSP prior to March 1, the net cost will be an extra $1,131.74. If I contribute an extra $3,000, I’ll be out an extra $1,697.71, and heck, if I contribute another $4K, it’ll be an extra $2,263.61.

So I’m asking myself (with only a few days to spare), if I want to go further into debt in order to inrease my contribution to my RSP, and reduce my taxes owed. I think I read on Radio Girl’s blog that interest on investments is a deduction? I’ll have to investigate. Right now I’m torn about just holding the status quo, or thinking about my future self with additional money invested, when I’ve long forgotten about a minimal consumer debt (hopefully).

What would you do?

(Turbo Tax told me if I contributed $40K, I’d pay only about $15K in taxes. Sorry, my head would come off thinking about that one!)

For the rest of Family Day, I’ll ponder my options. Meanwhile, I’m glad to have finally scratched my HST return and the majority of my Tax return off my to-do list. They were on my vacation to-do list. Seems to-do’s weren’t very important on vacation.

 

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9 responses to this post.

  1. Doing your taxes on a Saturday night? You’re my kind of gal!
    Here’s a link to the CRA website that explains deducting investment loan interest. My investments are in non-reg accounts, not RRSPS – I’m not positive but I don’t think you can deduct the interest for an RRSP loan. This link probably explains it though, straight from the horses mouth 🙂

    http://www.taxtips.ca/personaltax/investing/interestexpense.htm

    Reply

  2. If you’re boring then I must be deadly dull! I’ve had my info input on Turbo Tax (previously Quicktax) for weeks…I mean…it’s so much fun, right?? What I love about it is my info gets forwarded from one year to the next so all I have to do is plug in a few numbers. And it’s linked to my daughter’s as well as we share her tuition etc. Easy schmeasy!(and her’s is FREE!)And I don’t even have to leave the house – how great is that?

    Reply

    • Jane, at least nobody can call us slackers, right? Get it done and out of the way, that’s always a bit of a relief. I find when life gets a bit stressful, if I even do one little thing that’s a kindness to my future self, I feel better already. Sounds like I’ll be a TurboTax customer for a number of years in the future based on your great feedback. Thank you!

      Reply

  3. I have used Quick tax now Turbotax for years. I like the program. I have mine and hubs in allready. I’m self emoyed and he has a T4. I had him taking extra tax off his pay through the year so that his refund will pay my tax owing. The past few years I had to pay a bit on top of that but this year looks like I’ll be covered completely by his refund. It’s nice to get it out of the way early.

    Reply

  4. I haven’t got my tax slips yet or else I probably would have done mine by now to see the damage. Chances are it won’t happen until April. Or May. Or June… 🙂

    I love the RRSP calculators. 😛 Almost as good as retirement calculators – but more accurate I guess.

    Reply

  5. […] my HST return and the majority of my Tax return off my to-do list. … … Link: 2010 Income Tax « Middle Class Mom in Toronto's Blog ← Hire positive cash-flow Tax Lawyer A great Accurate Tax Return […]

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