“I just went to class for 4 hours, worked all afternoon, stopped off at the gym, and finally got about half of my readings done for tomorrow. The last thing I want to think about is taxes”
Using much the same logic we looked at when applying for scholarships and bursaries this might be a bit of a chore, but if you look at the dollars-per-hour benefit of getting your taxes done on time it might surprise you. If you learn to do your own taxes the benefits can be enough to give yourself a kick to the butt for not doing it sooner.
Students are notorious for being disorganized and procrastinating things until the last minute, these two characteristics are enough to make most accountants cringe. They are also the reason why students often do not get the full benefit of their tax refunds. The general attitude I have encountered amongst students is that most of them will get back all of the income tax they have paid during the summer and for the part-time jobs they worked during the school year with the basic tax credits. While this is true, it does not maximize the potential for future dollars.The above quote sums up the feelings of many students when it comes to tax time. The unfortunate thing for most students is that (much like scholarship and bursary applications) if they spend a hour or two getting organized and realizing what tax breaks they were entitled to, they could save themselves a lot of money.
The classic student response to taxes is to get their T4 (statement of income) from their summer job, and possibly their part-time job during the school year and march right down to H&R Block or another tax specialist. Now H&R actually has a pretty good set rate for students at $29.95 a pop, but you get what you pay for. I went there last year in order to take advantage of the fact that you can walk out of there with a money order for the amount of your refund. Now that’s a pretty sweet deal for a university kid who is quickly running out of any summer job money and needs to stretch it out until the end of the semester. That being said, the individual I dealt with had a very difficult time communicating in English, and it became readily apparent she knew nothing about the tax code, when I would ask her specific questions such as, “I moved to school this year, but would the move back to my hometown in order to work for the summer be tax deductible as well as my move back to school?” She was absolutely stumped.
Basically if you go to H&R Block as a student you need to realize that they really don’t care about you because all they are making is a low flat rate off of your return. There is no incentive there for them to find you the maximum return as they are not working on a commission basis like they do for most adult clients; therefore, you will be served by a very inexpensive seasonal employee. I’m not sure what your experience generally has been with inexpensive seasonal employees, but it’s not an ideal situation for me. After doing my taxes on TurboTax (the former Quicken) this year I realized that all the H&R Block employee did for me that day was read the inter-office version of TurboTax off the screen to me and enter my answers. That is literally all they did. I did not receive the full benefit of my potential tax deduction.
Like most university students I was happy at the time that I walked into H&R Block that day with a slip of paper, and walked out with a couple thousand dollars that was immediately deposited into my account. However, now that I’m ‘all grown up’ and in the workforce paying real taxes it would have been really nice to have been able to carry forward some of those tax credits that I had when I was a student. Now, if you’re a student only have a very basic tax preparation to do, it might be slightly quicker and less stressful to simply go down to the local tax preparation shop and pay only $30.00 to have it done, but if you have any chance at other deductions you should look at doing it yourself.
The benefits of doing your own taxes as a student are numerous. The first of which is that it’s cheaper. Most online downloadable programs have student versions for $10-$15. Sure, this doesn’t cut H&R by much, but considering it’s basically the same service you might as well yourself that extra pitcher at the bar. By far the bigger benefit is that you get used to the tax system slowly, and under pretty low-risk circumstances. There are only a few major areas students have to worry about. In the meantime you set up your online filing system for the coming years when you will need it. There is a lot to be said for spending an hour or two skimming through student tax tips (or just read our next article). On a per-hour basis it could be a huge pay off. The classic line that rings true to me when it comes to learning to do your own taxes is that, “No one cares about your money as much as you do.” If you let the government keep the money you worked your butt off for, believe me they will.
If you are going to a university that is part of the Canadian Federation of Students (which is most universities in Canada) they give you a code to file your taxes for free with Ufile. Some student unions also set up an office to help students file their taxes each year.
See my next article on tax returns for a summary of the tax savings available to the majority of Canadian students.