MILLENNIALS LIKE DOING THEIR OWN TAXES,
But may need a pro if owning a side business
They may still be living at home but who says millennials can’t do their own taxes?
A survey from H&R Block Canada Inc. finds 63 per cent of Canadians 18- 24 have stopped asking their parents to file their tax returns for them and started filing themselves. The survey found that 61 per cent of millennials, those 18- 34 when the survey was conducted online from March 8- 9, had filed their taxes on their own before turning 24.
“We are finding that these millennials are comfortable doing their taxes. They are getting more information and becoming more confident and using online tools,” said Lisa Gittens, a tax professional with the Toronto east district with H&R Block Canada.
She says there is so much information available for millennials and they are tech- savvy which allows them to go into different forums and finds answers to any questions they have.
“I think it’s a very good thing because they are confident filing,” said Gittens. “There is always opportunity to get a second look on their return.”
When it comes to relying on their parents, the most common reason, cited by 21 per cent of respondents, was fear of making a mis- take. Next on the list at 14 per cent was just the ease of depending on your parents to do your return. The third reason at 13 per cent was not having to spend money on a tax professional.
Most tax returns for young people 18 to 24 are relatively simple and involve a T4 slip f or employment i ncome from say a part-time job and perhaps a tuition credit. But young Canadians with a side business, an increasing demographic, should consider some professional advice, said Gittens.
“Ask questions about the type of income to report from self- employment, expenses that are allowed and what type of records they should be keeping,” she added.
Even Canadians under the age 18 are filing on their own with Albertans leading the way with 19 per cent of those filing a return under that age doing it on their own.
“As more young people are using digital tools, it’s becoming easier to do your taxes,” said Michael Allen, a portfolio manager at Wealthsimple, which focuses on millennials and counts 87 per cent of its clientele as under 45. The company’s platform allows clients to log in and find all their tax documents. “You can download them and print them anytime. You’re not consolidating a bunch of mail or scanning documents.”
J. D. Greenberg, of Toronto- based Paisley Pike Chartered Accountant, said he supports young people doing their own taxes but likes to see it integrated with parents if they are still dependants living at home.
“I’ll tell you a story (about a young client) who thought he was doing great because he got a $ 2,000 refund but when he got his cheque it was $ 300,” said Greenberg. “It was disappointing because he had already spent the money.”
What the client had done is overstated the amount of his RRSP contribution while also contributing more into his RRSP than allowed. Luckily for him, Ottawa has a $ 2,000 lifetime over- contribution limit before a taxpayer is penalized.
Greenberg says there are other reasons for checking with a professional because there are often missed opportunities to save money, such as claiming medical expenses, public transportation (that was changed in the last budget) or tuition costs.