The answer is definitely “Yes”. RKB Accounting strongly recommends our clients to be knowledgeable. ChatGPT can answer your tax related questions. ChatGPT can not do your taxes it can only provide you information based on your questions and that can help you in filing your taxes.
When you file your taxes with RKB Accounting, we form a partnership with you in which we encourage you to ask questions. When we say “a partnership,” we mean a relationship where you share all your information based on which we analyze and recommend to you what tax benefits and credits you may be entitled to, we understand that you will be able to ask more questions when you have some or more knowledge about the topic. At the same time, you will be able to ask questions or seek clarification when RKB Accounting answers your questions. You can also get help from ChatGPT when you are aware of the topic that applies to you.
We thought of writing this blog based on our experiences that we are able to help our clients in tax planning when they are more aware of the topics or issues that can affect their personal income taxes.
To the best of our efforts, every year before the tax filing season starts, we send an email to all our clients requesting some information as well as providing a link to our website which lists the most common tax credits and deductions to have a look into if they can think that may apply to their situation. Please visit the link below to learn more.
Personal Income Deductions and Tax credits
If you have time, you may want to look into this list. If you want some further information on items listed on this list, you can always take the help of the ChatGPT for more details. Please do not hesitate to contact RKB Accounting if you do not want to use ChatGPT. However, also note that if you use ChatGPT and then contact RKB Accounting, we believe you will be able to put a better question or seek further information from us.
I assume that it may be a little complicated what I have mentioned in the above paragraphs. Hence let me give you an example for you to have a better understanding.
Example: You know what RRSP is? But you are not sure how much you should invest into your RRSP? You asked this question to ChatGPT – How much should i invest in my RRSP?
ChatGPT gave you the answer below.
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Determining how much to invest in your Registered Retirement Savings Plan (RRSP) depends on various factors, including your financial goals, income, expenses, and retirement plans. Here are some general guidelines to help you decide how much to contribute to your RRSP: 1. Contribution Limit: · Your RRSP contribution limit is based on your earned income and is calculated as a percentage of your income, up to a specified maximum limit. You can find your contribution limit on your Notice of Assessment from the Canada Revenue Agency (CRA) or by checking your My Account online. 2. Contribute to Maximize Deductions: · Contributing up to your maximum RRSP contribution limit allows you to maximize the tax deductions available to you. Contributions to your RRSP can be deducted from your taxable income, reducing the amount of income on which you have to pay taxes. 3. Consider Your Income Tax Bracket: · If you are in a higher income tax bracket, contributing to your RRSP can result in significant tax savings. You may want to consult with a tax professional to determine the most tax-efficient contribution strategy based on your current and expected future tax rates. 4. Long-Term Goals: · Consider your long-term financial goals, especially those related to retirement. Determine how much you’ll need in retirement and work backward to calculate the annual contributions required to reach that goal. 5. Other Financial Priorities: · Balance your RRSP contributions with other financial priorities, such as paying down high-interest debt, building an emergency fund, and contributing to other savings or investment accounts. 6. Employer Pension Plans: · If you have an employer-sponsored pension plan, factor in the contributions you make to that plan when deciding on your RRSP contributions. This ensures that you are optimizing your overall retirement savings strategy. 7. Life Changes: · Reassess your RRSP contributions regularly, especially when there are significant changes in your life, such as changes in income, family status, or financial goals. 8. Diversification: · Diversify your investments within your RRSP to manage risk. Consider a mix of asset classes, such as stocks, bonds, and other investment vehicles, to align with your risk tolerance and investment objectives. 9. Consult a Financial Advisor: · If you’re unsure about how much to contribute or need personalized advice, consider consulting a financial advisor. They can help you create a comprehensive financial plan based on your unique circumstances. Keep in mind that these are general guidelines, and individual circumstances can vary. It’s crucial to tailor your RRSP contributions to your specific financial situation and goals. Additionally, tax laws and contribution limits may change, so it’s advisable to stay informed and seek professional advice when needed.
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You may think the answer from ChatGPT was overwhelming, but you are still not sure how much to invest and why.
As per our general understanding, you are right. But we really appreciate your effort that you have taken a step to make a better partnership relationship with your accountant. Now you have some awareness about your RRSP contribution limit.
At this point, when you contact us, the ball is in our court. We need to evaluate how much information we have about you. The information that we need to have at least:
We do not know what you have searched on ChatGPT. But based on the information we have we will advise you.
Game changer:
After these interactions between my client and RKB Accounting, we think the answers provided by us will be most optimal for your tax situation.
For example, if you are a first-time home buyer in Canada, we recommend you first invest in your FHSA (First home saving account), which was introduced at the beginning of 2022.
The above example is a very basic example for you to understand, but there may be complex tax situations where your awareness could be helpful for us when you ask more questions.
You also need to note which version of ChatGPT you are using. When was the last knowledge of ChatGPT was updated?
It is interesting to note that as of today, October 15, 2023, I asked ChatGPT the following question, and below is the answer from ChatGPT.
What is First Home Saving account (FHSA) in Canada?
ChatGPT gave me the answer below.
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As of my last knowledge update in January 2022, there isn’t a specific financial product known as a “First Home Savings Account” in Canada that is universally recognized. However, it’s possible that new financial products or government programs may have been introduced since then. In Canada, individuals often use Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) to save for their first home. These accounts offer tax advantages, and there are specific programs, such as the Home Buyers’ Plan (HBP), associated with RRSPs that allow first-time homebuyers to withdraw funds from their RRSPs to purchase a home. To get the most accurate and up-to-date information about any specific savings account or program related to first-time homebuyers, it’s recommended to check with financial institutions or consult with a financial advisor. They can provide details on the latest offerings, eligibility criteria, and any changes in government policies related to homebuying and savings.
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In the above example, we noted that ChatGPT is not up to date and does not know about the most recent changes in Canadian taxation. Before writing this blog, we have already written a blog on First Home Saving Account (FHSA). Please click the link below to learn more about this.
First Home Saving Account (FHSA)
Apart from the above example, there could be various other factors that may be involved in your tax planning. When you make a partnership with your accountant, you share all your financial and family information. Your accountant asks you various questions to gather more information about you. Your accountant reviews your past filed taxes to gather further information.
The information that you gathered by asking ChatGPT is also very important as you have more knowledge, which enables you to ask your accountant for further information.
Your accountant can further guide you:
ChatGPT can also help you not just go with what your accountant or banker said but get further information based on their advice, further clarifying your queries. Use ChatGPT, if you can, to have an understanding of the topic that you may think, will apply in your tax planning.
Made in Canada
There is also a chatbot developed in Ottawa. Published on “National Post” April 07, 2023
OTTAWA – “Hi there! I’m TaxGPT, a friendly AI tax advisor. I can help you learn more about taxes in Canada in 2023.”
Those are the first words of TaxGPT, a new (and free) artificial intelligence-powered chatbot launched by Ottawa software developer Paul Craig to help Canadians file their own taxes instead of turning to tax preparation software companies constantly trying to “upsell” their services.
There few other gpt tax advisor bot or ai tax bot or ai for tax questions. All can help you in getting information and those information can be valuable.
Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information.