It’s Tax Time Again, Are You Prepared?
Winter is almost over and now we are all dreading……. tax time. The income tax deadline – April 30th. Or are we? Most of us have been doing our taxes (or having them done) for many years and are in the habit of collecting our treasured receipts in a box or baggie to present to our accountant (or spouse), and cross our fingers and hope we get a refund (or at least break even.) Having your taxes done by a Certified or Chartered Accountant pretty much guarantees they will be done right and you will get every deduction available to you in your circumstances, but not everyone needs an accountant. Many of us do our own taxes and along that line, we have prepared some quick tips for Seniors and Students to make sure you are not missing any deductions.
The age amount is a tax credit available to an individual who is 65 or older on December 31 and has a net income of less than $82,353 (2015). If your income is $35,466 or less, you can claim the full $7,033 which will result in a $1,054.95 non-refundable tax credit. If you can’t use the credit because your income is too low, you can transfer the credit to your spouse. Also, don’t forget to claim the corresponding provincial tax credit on your return.
Pension income amount
If you were 65 or older on December 31 and received annuity payments for yourself or because of the death of your spouse or common-law partner, you can claim the pension income amount on your tax return. The tax credit of up to $2,000 is available if you receive income such as:
- Payments from a Registered Retirement Income Fund
- Foreign pension income, including U.S. Social Security that cannot be deducted on line 256 of your tax return
- Elected split-pension income received from a spouse
- Income from a Deferred Profit Sharing plan
You can find a complete list of what income qualifies for the credit at age 65 on the CRA’s website.
Home Accessibility Tax Credit
In the 2015 Budget, the previous government announced a new tax credit called the Home Accessibility Tax Credit. This non-refundable tax credit, starting with the 2016 tax return, is for “Qualifying expenses incurred for work performed or goods acquired in respect of a qualifying renovation of an eligible dwelling of a qualifying individual.” If you are 65 or older on December 31, 2016, you can claim up to $10,000 of eligible expenses on your tax return to receive a 15% or $1,500 credit. A person who qualifies for the disability tax credit is also eligible for this. You can find a list of everyone who can claim this tax credit and more information about the credit on the CRA’s website.
Make sure you take full advantage of tax deductions and tax credits that you are eligible for as a student. Every dollar you can save in income tax that you pay will help you stretch your budget to cover student expenses.
A tax deduction will reduce your taxable income for the year. Tax deductions available to students include:
- Moving expenses (for eligible moves)
- Child care expenses
A non-refundable tax credit reduces your taxes that are owed. It is calculated by multiplying the total dollar amount by the lowest tax bracket (currently 15%). For example, if you spent $500 on public transit you would get a credit of $75 ($500 x 15%). Non-refundable tax credits for students include:
- Tuition amounts
- Education amounts
- Canada employment amounts
- Public transit amounts
- Interest paid on Student loans