I plan to file my taxes online for the first time. What do I need to know?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 25 March, 2004 | 2:00PM
Dear Expert:

I am planning to use software for the first time to do my taxes. I used to do my own returns on paper and then gave up a few years ago and took it to a tax preparation service, which filed the return for me electronically. One of the reasons I am turning to software is that I understand I will be able to "net-file" myself. How does this differ from "e-file", and is there a cost to this? Can I expect as fast a processing turnaround time, as I am sure that once I complete my return I will find that I am entitled to a refund? Are there any pitfalls to using tax software? My situation is quite straightforward, and I plan to follow the software's "easy steps" process.

Expert Answer:

The major difference between EFILE and NETFILE is who does the filing. With NETFILE, a taxpayer can file his or her own return directly to Canada Revenue Agency (CRA) over the Internet using certain authorized software or a Webfile application. You will have to pay for the software or the use of the Web application, but CRA does not charge a fee for this filing. You will have to have an access code to use NETFILE. This code can be found in the T1 personal income tax return package you received from CRA. If you don't have the access code, go to the CRA website: www.netfile.gc.ca.

EFILE is an electronic filing service that allows authorized service providers to send your tax return to CRA through the Internet. In this case, you don't have to purchase the software or even prepare your own return, however the registered EFILE service provider will charge you for the service.

Both electronic filing methods have the benefits of greater accuracy (no mathematic errors) quicker processing than paper returns (refunds are generally processed within two weeks) and no requirement to send in paper documentation, although you may be asked to provide support for certain items in your return at a later date.

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Gena Katz

Gena Katz