Welcome back to our discussion about Taxes, since it is still that time year. I already know some of you are early birds and have already gotten over that daunting task (Good for you for getting it done quickly, and I hope you are putting that money into good use *cough* SAVINGS *cough, *cough* Paying off debt *cough*)
However, the other day after my friend read my post about RRSP this was her comment.
“ The nerve of you to have a post about putting money into RRSP and you not telling me ways to avoid paying taxes other than putting money into my RRSP “
I actually laughed it off, because I was planning on discussing this regardless. So after getting a mouthful from my friend, I thought it would be in my best interest to provide the strategies ASAP! Even though you can’t do anything about last year’s taxes, there is still time to prepare for the current year’s taxes. Remember not all of these suggestions will cater to your specific needs at the moment. But here are some deductions that will make a difference.
Family Deductions
The government has always catered to the needs of the families. One such allowance is the transferring of non- refundable tax credits to either spouse or common-law partner for a better return (so if anyone is thinking of shacking up or getting married to save money start looking…kidding). There are the Children care expenses provided for individuals or couples that have children (age 16 and under), so try to maximize on what the government will provide for you.
However, the last couple years they have added a new Children’s Activity Tax credit. This one is to encourage children to get involved in sports, arts and other activities. So ideally, you can claim up to $500 per child (down from $1000) and will be able to get 15 back in your returns (link). But news about this after looking on CRA website I’ve notice they are planning to eliminate this credit. So keep an eye out on the tax credits they are getting rid of every so often.
Student Loan Deductions
After spending the year or 5 years with your post-secondary and/or post-graduate degree and having to use OSAP (student loan). All those times you were stressing about paying back the principal and interest. Well, you are in luck you!! The interest payments are deductible and you are able to carry forward for up to five years (link). So it is a good idea to wait until you have a nice paying job to claim those deductions. Unfortunately, I discovered that the Federal Education and Textbooks tax credit are being eliminated this year, but will not eliminate the tuition tax credit. So keep these things in mind, especially textbooks (try to find those used textbooks)
Self-employment Deductions
Being self-employed is a great way to maximize your return. A number of expenses you can claim at the end is limitless. From Accounting and legal fees, Office space, Transportation, Phone, Internet, Supplies, Meals and Entertainment; even travels (as long as they are business-related). Be sure to keep all the related receipts and invoices together to claim those deductions.
Donations
Donating is not only about being a Good Samaritan or way to feel good about giving back to something that you are passionate about, but it is also a great way to get a sizeable return. Especially if you are qualified for the First-time Donor’s Super Tax Credit (link but preferably cite); so be mindful you can claim an additional 25% credit including the regular credits (15% on gifts up to $200 or 29% on amounts over $200) (cite). I am definitely going to be donating more often, not only for tax reasons but I have been thinking of giving back to organizations that mean something to me.
Public Transit Deductions
This is the time when taking transit comes in handy! You can receive a tax credit of 15%. So instead of throwing away your monthly transit pass!! Save them! However, this is only for individuals that use unlimited passes, electronic payment cards and/or smart card. Always make sure you have a receipt for proof as well.
These are only a few things that can help you with getting a higher tax refund or even not paying back as much. If you recall my RRSP post, that’s another way to save on taxes. So if you can think of any other deductions or tax credits that help a lot, shoot me a comment below. But remember it’s better to do it before April 30th then paying a fee (if you owe). Until next time ladies & gents stay fit…
Note: Information about credits can be found on http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ll-dts/menu-eng.html
Very very informative Kamille. Awesome post!
Thanks chicka! I hope this will help you on your taxes.