Tax time on the farm is enough to send the children fleeing to a sound proof part of the house, the dog to seek refuge out in the cold and hair loss to occur below the cap line.
Wouldn’t it be nice if you could just sit down at the computer, answer a few simple questions that prompted every entry, do the calculations and produce a nice clean copy of the income tax forms ready to mail away?
Life isn’t quite that simple, but income tax software does make it easier to disclose the farm’s annual financial history following Revenue Canada guidelines.
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Not all tax preparation software packages are created equal. The most basic programs allow you to enter the most basic information. Farm tax is anything but simple, and the programs that handle it best are those that provide tools specific to farmer needs.
Required capabilities
Accepting a farm small business statement and capital cost allowance information are necessities in any software program that is going to save the user time.
Inventory adjustment functions may also be necessary for any farm business that shows a loss. It may also help when a farmer sells off a major part of the farm, such as a livestock enterprise, to offset expected losses in the future.
Basic programs do little more than provide a form to fill out on the computer. Better programs, usually the ones that support farm income statements and capital cost allowance information, provide calculations and hints on how to save time and money. These programs may also contain help functions that will explain the details of each step and the regulations if you get lost.
Most of these software choices will allow the user to prepare several income tax returns, enough for a whole family, but not all are so generous.
Electronic filing may also be a feature, allowing the preparer to save the completed forms on a disk. Most companies that prepare income tax returns will file the information to Revenue Canada for a small fee.
Pay little or lots
Prices range from as low as $20 to as high as a few hundred dollars, but the middle ground contains products easily able to meet farm needs. Choosing a tax package should also be based on the existing computer system. Minimum requirements for the program are written on the package, but most require a minimum 386 IBM compatible computer with 4 MB of RAM, a color monitor and Microsoft Windows operating system.
