I always derived some perverse kind of pleasure from doing my taxes. For years I insisted on doing them by hand, and always felt some satisfaction when I made everything add up nicely. This was until, two years in a row, I made an error early on in the process, which forced me to redo large swaths of my work. The joy was gone, and I decided to no longer do my taxes by hand.
Now, like many people, I have adopted online methods. I personally use www.ufile.ca. This is a surprisingly well-designed, user-friendly system. One can punch in the numbers from their various tax slips in any sort of order, and it will instantly provide you with an up-to-date result at any time. But, there is a hidden dark side to the ufile tax preparation approach.
Unfortunately, ufile might just be TOO easy to use. Recently in preparing my taxes I ran through my slips in no time, clicked through to the results page, and was happy to see that I had a modest refund owed me. Then I saw something odd. First, I hadn’t used any of my available education amount for the year. Second, the result page didn’t show any capital gain, whereas I expected to have one. After poking around I found my error. I had keyed in some digits wrong for one of my capital gain entries, and instead of claiming a $1.06 gain for the trade, I had claimed a $960,000 loss. This is a substantial error that explained the observed oddities. What scares me is that it was so easy to make this error, and simultaneously difficult to spot it once it had been made. If I had been doing my taxes by hand I would have definitely caught this, but since ufile is so easy, these kinds of errors are simple to make.
I suspect that, compared to the old days of paper returns, there are a large number of people who are making the kinds of mistakes I describe. It is too easy for a mis-key to result in 1 or 2 extra digits somewhere. But I think the problem can be addressed. What the ufile system needs is some kind of intelligent “Clippy” equivalent that will do a sanity check on your inputs. On my return, for example, it might look at the numbers in aggregate and ask me “Hi Garth! Say, you don’t seem like the kind of guy who would lose $960,000 in a money market fund. Are you sure this is right?” Or, in the case of another mistake that I caught, it would say “Hi Garth. I find it kind of strange that these two different trades have exactly the same numbers entered for ‘cost’ and ‘proceeds’. Are you sure you didn’t enter the wrong numbers in one of them?”
So, in conclusion, ufile and web tax preparation services in general are great. Their main problem is that they are TOO great, making simple errors easier to make and overlook. There needs to be a mechanism to address these kinds of errors.