Teaching Taxes SimpleTax Companion Guide

Transcription

1 Teaching Taxes SimpleTax Cmpanin Guide 2017 Rev 17-10

2 Abut this guide Teaching Taxes is an educatr-led unit which intrduces high schl and pst-secndary students t Canada's tax system and teaches them hw t prepare a simple incme tax and benefit return. This cmpanin guide is designed fr educatrs wh want t intrduce students t tax preparatin sftware and the nline tax filing prcess thrugh the use f SimpleTax, a NETFILE Certified sftware prduct. Mre infrmatin abut the Teaching Taxes prgram can be fund n the CRA s website. simpletax.ca 2

3 Abut SimpleTax SimpleTax is (in ur wn humble pinin) the best tax sftware in Canada. It was designed and built by three peple in beautiful Vancuver, BC. Tday, we re a team f seven wh lve helping Canadians file their taxes! We re strng supprters f tax educatin and educatrs like yu. We believe Canadians shuld nt nly be able t d their wn taxes, but understand them. Educatrs wh incrprate SimpleTax int Teaching Taxes prvide students with hands-n experience using tax preparatin sftware. In additin, SimpleTax: runs in a web brwser, s n installatin is required; updates yur tax refund amunt in real-time, s students can quickly and easily see hw each amunt they enter impacts their tax return; allws students t see the cmpleted paper frm equivalents as they g; is free f charge, s n license is required t use the prgram. SimpleTax can be used in place f, r in additin t, the paper frms required t cmplete the Teaching Taxes student exercises. Mre infrmatin can be fund n ur website, Requirements SimpleTax runs in a web brwser, s it is cmpatible with PC, Mac, Linux, and mst tablets (prvided they have at least 1GB f memry). There is n sftware t dwnlad r install. We recmmend using the latest release f yur preferred web brwser. The fllwing brwsers are supprted: Ggle Chrme Mzilla Firefx Apple Safari 9+ Micrsft Edge Micrsft Internet Explrer 11+ simpletax.ca 3

4 Filing yur taxes nline Filing yur taxes nline is simple and similar t filing n paper. Instead f using a paper tax package, yu use tax sftware. Instead f ging t the pst ffice and mailing yur return, yur tax data is transmitted securely ver the internet. Tax sftware First, yu need t pick which tax sftware yu re ging t use. The CRA des nt build tax sftware; instead, they wrk with independent sftware develpers like SimpleTax. The CRA sets ut the guidelines and requirements fr tax sftware. It s up t each develper t build a prduct that meets these requirements. This is why there are a variety f sftware prducts available, giving Canadians a chice f which prduct t use. Sftware that s been certified fr use by the CRA can be fund n their website. TIP: Cmpare a few prducts befre deciding which ne yu ll use. Prducts differ in features, design, supprt, restrictins, and price. The CRA des nt pay sftware develpers, s there is typically a charge t use tax sftware. Just like with paper frms, new sftware is required each year. Befre starting yur return, make sure yu re using sftware fr the crrect tax year. The fundamentals f cmpleting yur tax return remain the same when using tax sftware. Rather than calculating the values fr each line by hand, tax sftware takes care f these calculatins fr yu. It s then the respnsibility f the sftware t create a digital tax return in a frmat that the CRA will accept. Tax sftware will als prepare a cpy f yur return using the paper frms fr yur recrds. Submitting yur return nline Once yu ve finished yur return, yu need t submit it t the CRA using NETFILE. Tax sftware takes care f this step fr yu. When yu ve successfully submitted yur return, yu ll receive a CRA cnfirmatin number. simpletax.ca 4

5 When yu file yur return nline, yu d nt need t send the CRA a cpy f yur supprting dcuments; instead, it s yur respnsibility t keep yur receipts and infrmatin slips fr six years. After the CRA has prcessed yur return, they may cntact yu and request cpies f these dcuments. Advantages f filing nline There are a number f advantages t filing nline. Cmpared t paper, filing nline: saves paper; takes less time t prepare; reduces the ptential fr typs and calculatin errrs; is the fastest way t get yur full tax refund. While paper tax packages are still available nline and at the pst ffice, the CRA strngly encurages peple t file their taxes nline. Using SimpleTax SimpleTax is very easy t use. While the sftware is designed t be used withut an instructin manual, there are a few key cncepts yu may want t familiarize yurself with befre intrducing SimpleTax t students. Key cncepts Everything is n ne page Everything is n ne page with infrmatin divided int five main sectins. Simply scrll up r dwn t navigate between sectins r quickly jump between sectins using the left side navigatin bar. Accunts and returns Yu dn t need an accunt t use SimpleTax, hwever creating an accunt will allw yu t save yur wrk, as well as carry frward yur infrmatin t next year s return! simpletax.ca 5

6 Fr the purpses f Teaching Taxes, we recmmend each student create ne accunt (using their wn address) and set up a return fr each exercise. Students can quickly switch between returns using the drpdwn menu in the tp navigatin bar. Abut Yu Enter yur persnal infrmatin (name, address, prvince f residence, marital status, etc.) in the Abut Yu sectin. Yur Taxes (Search) This is where the magic happens. Add incme, credits and deductins t yur return using the search bx. Fr example, t add a T4 t yur return, search fr T4 r emplyment incme. The search bx is intuitive and flexible and uses keywrds t help yu find what yu re lking fr. In 2017 we have added an ptinal interview prcess, click the Answer a few questins buttn t kick ff the interview. Walking thrugh the interview culd give students an idea f the myriad f tax credits that are available. Review Use the Check & Optimize buttn in the Review sectin t check fr errrs. SimpleTax may als suggest certain credits depending n the tax situatin. Yu must fix any errrs t cmplete yur return; warnings are ptinal. When the return is errr-free, yu will see Yur tax return is ready. Summary There are tw parts t the Summary sectin. Amunts is a line-by-line breakdwn f yur tax return. Dcuments is where yu will find the cmpleted paper frms. We recmmend students check their wrk using the Dcuments sectin. Submit The Submit sectin is used t send yur cmpleted tax return t the CRA. Since these exercises invlve fictinal taxpayers, yu wn t be able t submit thrugh NETFILE (students may try, they will just see a NETFILE transmissin errr). simpletax.ca 6

7 Yu will find a Save PDF buttn in the Submit sectin. Students can use this buttn t save a cpy f the cmplete exercises. Help Help can be fund thrughut the app by clicking n the blue questin mark icns. Yu can als refer t ur help page, fund by clicking n the Help link in the upper-right crner. Cmpleting the exercises using SimpleTax T begin, pen yur web brwser and navigate t If yu dn t have an accunt, click n Sign up. If yu already have an accunt, click n Lg in. Fr each exercise, yu will need t cmplete the basic persnal infrmatin in the Abut Yu sectin. Answer N t the questin Did yu wn freign prperty with a ttal cst f mre than $100,000 in 2017? Fr each exercise (except Exercise 1(QC)), chse a prvince f residence ther than Quebec. We recmmend ding Exercise 1(QC) in all prvinces as teaching pprtunity. This emji ( ) appears whenever we think there s a great teaching taxes pprtunity related t the exercise. NOTE: The SINs prvided by the CRA ( and ) will nt validate in SimpleTax. Instead, use: and simpletax.ca 7

8 Exercise 1 High schl student T4 slips: Using the search bx, add the Emplyment Incme T4 sectin by searching fr T4. Transcribe the infrmatin frm the T4 frm Best Bkstre. Add a secnd T4 by clicking Add anther T4. Transcribe the infrmatin frm the T4 frm Mari s Pizzeria. Discuss payrll deductins like incme tax, EI premiums, and CPP premiums. Catherine is paying int EI but nt CPP because she is still under 18. NOTE: Bx 10 f the T4s must be filled ut (even thugh this is nt indicated n the slip). Students can use any prvince r territry, except Quebec. Tips: Search fr tips r ccasinal earnings in the search bx and add the Tips, Ryalties, Occasinal Earnings, etc. sectin. Enter the tips in the Amunt f incme clumn. Leave the Canadian tax withheld clumn blank. Tips and ccasinal earnings (like babysitting incme) are taxable even if yu dn t receive tax slips. Nte that Catherine has an EI verpayment calculated n frm T2204 and will receive thse premiums back with her tax refund. simpletax.ca 8

9 Exercise 1 (QC) High schl student (Quebec) Fllw the instructins in Exercise 1, except: Indicate that the prvince f residence is Quebec. Answer Yes, by anther persn s plan t the questin Did yu have basic prescriptin drug insurance thrugh a grup insurance plan thrughut 2017? in the Abut Yu sectin. Bth T4s shuld have a prvince f emplyment (Bx 10) f QC. Students will be prmpted t add the details fr an accmpanying RL-1. Fr each RL-1, enter: the amunt frm Bx 14 f the crrespnding T4 int Bx A, and $0 in Bx E. Quebec has a distinct prvincial taxatin system. Unlike the ther prvinces and territries, their tax system isn t administered by the CRA. This is why Quebec residents need t submit a federal return t the CRA and a prvincial return t Revenu Québec. simpletax.ca 9

10 Exercise 2 - Pst secndary student T4 slip: T4A slip: Add the Emplyment Incme T4 sectin thrugh the search bx. Transcribe the infrmatin frm the T4 frm Streamers. Select any prvince ther than QC in bx 10. Add the Pensin, Retirement, Annuity And Other Incme T4A sectin thrugh the search bx. Transcribe the infrmatin frm the T4A frm Twn University. Add bx 105 under the heading Other bxes n yur T4A. Fr Type f award in bx 105, select Schlarships, etc. (full-time). Schlarship incme fr attendance in a full-time prgram is nt taxable (and is nt included anywhere n the tax return). Try ut different ptins frm the drpdwn t learn mre abut different types f award incme. T2202A - Tuitin and Enrlment Certificate: Add the Tuitin, Educatin, and Textbk Amunts -T2202A sectin by searching fr tuitin in the search bx. Answer Yes t the questin Were yu a pst-secndary student in 2017? Transcribe the Ttal Tuitin frm clumn A, and the # f full-time mnths in Clumn C, int the T2202A in SimpleTax. Nte that she has tuitin available fr transfer and carryfrward. What happens t her carryfrward when she transfers her tuitin t smene? Wh might she want t transfer it t? Why can t she transfer all f it? simpletax.ca 10

11 Exercise 3 Emplyed individual with spuse Yu and Yur Family: T4 slip: Indicate that Trevr is Married ( Marital status n December 31, 2017 ). Answer N t the questin D yu want prepare yur returns tgether? Enter Ivana s infrmatin, including her incme and birthday ( ) in the Yur Partner sectin. Indicate Ivana was self-emplyed. Since Ivana was self-emplyed, bth f their filing deadlines are extended t June 15 (but any tax balance is still due by April 30). Yu must include things like marital status and yur partner s incme n yur return. Yur eligibility fr many tax credits (like the GST/HST Credit and the Canada Child Benefit) depend n yur net family incme. Add the Emplyment Incme T4 sectin thrugh the search bx. Transcribe the infrmatin frm the T4 frm Gracdesigns. Select any prvince ther than QC in bx 10. RRSP deductin: Add the RRSP Cntributin & Deductin sectin by searching fr RRSP. Answer Yes t the questin Did yu make any RRSP cntributins r have any transfers? Indicate that Trevr s Deductin limit is $15,000. Add the cntributins Trevr made t his RRSP. It desn t matter whether the cntributins were frm March 1 December 31 r January 1 March 1. The difference between an RRSP and TFSA. Hw des an RRSP deductin impact yur tax return? The RRSP deadline cntributin deadline fr a tax year ( e.g., 2017) is 60 days after end f tax year ( e.g., March 1, 2018). Why might this be? Hint. Interest incme: Add the Other Investment Incme sectin by searching fr interest. Enter the interest amunt in the Other Investment Incme table. Yu are required t reprt interest incme n yur tax return even if yu dn t receive a tax slip. simpletax.ca 11

12 Exercise 4 Single-parent Yu and Yur Family: Indicate that Karen is Single, Separated, r Divrced. Answer Yes t the questin D yu have any dependants? This will add the Yur Dependants sectin. Yur Dependants: T4 slip: Navigate t the Yur Dependants sectin. Enter Annie s infrmatin: Answer N t the questin Did this dependant have an infirmity r disability. Answer Yes t the questin Is this dependant yur eligible dependant? Answer Yes t the questin Did yu have child care expenses fr this child? Enter the child care expenses in the table. There are many tax credits and deductins available fr peple with children. This will depend n yur prvince f residence. Mre advanced: why are childcare expenses a deductin rather than a credit? Add the Emplyment Incme T4 sectin thrugh the search bx. Transcribe the infrmatin frm the T4 frm Aquantic. Select any prvince ther than QC in bx 10. T5007 (Statement f Benefits): Add the Statement f Benefits thrugh the search bx (hint: search fr T5007). Transcribe the infrmatin frm the T5007. simpletax.ca 12

13 Exercise 5 Indigenus persn Abut Yu: T4 slips: Answer Yes t the questin Are yu a persn registered under the Indian Act? This will add the Persn Registered Under the Indian Act sectin t yur return. Yu dn t need t fill ut this sectin. Add the Emplyment Incme T4 sectin thrugh the search bx. Transcribe the infrmatin frm the T4 frm Big Isle. Add bx 71 under the heading Other bxes n yur T4. Add a secnd T4 by clicking Add anther T4. Transcribe the infrmatin frm the T4 frm Actin Yuth Centre. Discuss incme that is exempt (and nt) under the Indian Act. There is a lt if misunderstanding abut this. simpletax.ca 13

14 Additinal resurces While beynd the scpe f Teaching Taxes, ur blg prvides additinal educatinal cntent that may be f interest t yu r yur students: Our blg: Filing a Tax Return fr the First Time? Canadian Tax Return Checklist 4 Tax Tips fr Students & Recent Graduates 4 Mre Tax Tips fr Students & Recent Graduates Changing Yur Tax Return After It s Been Filed Get in tuch If yu fund this cmpanin guide helpful, r if there is smething we can d t imprve this guide, we d lve t hear frm yu. We lve meeting new peple! hell@simpletax.ca Facebk: Twitter: simpletax.ca 14