The DIY Tax Software Filing Trap

Tax season tempts Canadians with the promise of quick refunds, yet filing remains complex. DIY software like TurboTax markets simplicity and savings—but recent Ontario reassessments show the hidden costs, especially for families claiming provincial credits.

The TurboTax Debacle: Software Errors, Real-World Bills

Many Ontario households received CRA Notices of Reassessment clawing back the Ontario Childcare Access and Relief from Expenses (CARE) credit. TurboTax allegedly calculated the credit on the lower-earning spouse’s income alone, ignoring the combined-income cap of $150,000. Years later, CRA audits reversed those claims and demanded repayments—often $6,000 to $20,000 plus interest and penalties.

Intuit blames user input; filers insist they followed onscreen prompts. Either way, software had no safeguard to flag the nuanced rule, proving that automated tools lack the context a human professional provides.

Planning Tip: If you use software, review every income entry and print key forms before filing. Consider a pro’s second look when credits are substantial.

Why Convenience Can Cost You

• Interpretation Gaps: Software oversimplifies nuanced eligibility tests.
• No Context: It cannot sense when multiple incomes or dependents need special treatment.
• Zero Forward Planning: It files the current return but misses strategy for future years.
• Minimal Audit Support: After an audit notice, you’re largely on your own.

CRA Reassessments: A 90-Day Race

Under s.165 ITA, taxpayers have 90 days to object to a reassessment. Miss the deadline and the CRA’s figures stand—including interest from the original filing date. TurboTax users found the CRA’s “all or nothing” approach left entire CARE claims disallowed. Success on objection requires tight timelines, detailed records, and often professional advocacy.

Planning Tip: Note the 90-day objection deadline immediately and gather receipts, income slips, and childcare invoices before consulting a pro.

Seeking Relief: Narrow Paths

Taxpayer Relief provisions may cancel penalties or interest, but rarely the underlying tax. Relief for CRA error won’t apply when the mistake lies with software. Financial-hardship relief demands full disclosure and is far from guaranteed.

Planning Tip: If hardship looms, submit a complete relief application early, with a realistic payment proposal.

Why a CPA Pays for Itself

• Accurate Eligibility: Professionals know provincial nuances like CARE.
• Personalized Advice: They tailor deductions and flag audit triggers.
• Audit Representation: Many stand between you and the CRA.
• Year-Round Strategy: Planning reduces future liabilities.
• Error Prevention: One missed nuance can cost thousands—far more than a prep fee.

Many Ontario preparers charge only a few hundred dollars for family returns—far less than a six-figure reassessment.

A Cautionary Example

One Ontario family followed TurboTax prompts, claimed CARE, and was later reassessed for over $10,000. Interest and penalties mounted, relief was limited, and they faced years of payments—all because software misread a single rule.

Key Takeaways

• DIY Software Is Risky: Complex credits can turn convenience into costly error.
• Act Fast on Reassessments: File objections within 90 days.
• Relief Is Limited: Penalties may drop; tax rarely disappears.
• Hire a Pro: Affordable expertise prevents expensive mistakes.
• Document Everything: Meticulous records are your best defense.

The Ontario CARE fiasco shows the true price of a software slip. For anyone beyond the simplest return, professional help offers peace of mind and real savings.

DISCLAIMER: This article provides general information only and does not constitute legal or tax advice. Readers should consult qualified professionals for guidance tailored to their specific circumstances.