TAX SEASON IS STRESSFUL!
As an accountant, tax season (January to April) tends to be one of the busiest times of my year. As we get closer to April 30 (deadline to file personal taxes in Canada) most people start getting even more stressed because they want to make sure they are filing their taxes properly and want to ensure they are getting the most money back from their tax returns.
I’ve been filing taxes for myself for the past 5 years because:
i) As an accountant working towards a Chartered Professional Accountant (CPA) designation, I felt paying someone to do this was a waste of my money.
ii) I’m cheap and I didn’t want to pay someone $100-$200 for 15 minutes of work (I have a very simple tax return)
iii) I am the CFO of my personal economy so no one cares more about my money than I do.
However, whether you file your taxes yourself or you hire an accountant to do this for you, you could probably be getting more money back from your tax return (or reducing your taxes). Here are 6 ways you can get more money back from your tax return:
If you’re a student or recent graduate, your tuition credit (and other related tax benefits) can be claimed on your tax returns. For most young people, this is usually the best (and easiest) way to get the most money back from tax returns.
The cost of your transit passes can also be claimed on your tax return. It is important that you keep all your monthly passes. If you are a student with an annual transit pass, you can also deduct this as well. Just find out how much you are charged annually for the transit pass by looking at your student account details. For this to be an eligible expense, your transit passes have to provide detailed information such as the duration of use, the amount paid, as well as the transit authority.
There are so many medical expenses that you can claim on your tax return. Some expenses you might not know about include Prescriptions, medical and dental expenses, gluten-free products (for people with celiac disease), as well as, air filters, cleaners, purifiers and air conditioners (for people with respiratory ailments). The $45 bill you got in the mail after being rushed to the hospital in an ambulance? You can also deduct that from your tax return.
Your medical expenses must be at least 3% of your net income or $2,237 (whichever is less) to be claimed. You can accumulate your medical expenses till you get to this amount.
If you move within Canada, some of the expenses you incur could be deducted from your tax returns. To be eligible to claim this deduction, you must be employed, and you should have moved at least 40km closer to your place of work. Some expenses you can claim include the cost of movers, renting a U-Haul, furniture storage, meals and accommodation for you and your family incurred during the move, furniture storage, legal fees, and real estate commission (in the event you sold your home).
If you are a student, moving expenses can also be claimed if you have moved at least 40km to attend a post-secondary education full-time. However, this can only be deducted from any employment income earned in your new location at school. So if you didn’t earn any income you will not be able to claim this amount.
Note that all deductions must be greater than your earned income, otherwise you can carry forward these expenses for one year to realize the full tax benefit.
Learn more about this from the CRA: Line 219 – Moving expenses
Donating to charity and for noble causes is amazing. Did you know that you can also claim these amounts on your tax returns?
In Canada, for the federal tax portion, you are allowed to claim 15% of the first $200 and 29% for amounts over $200 (up to a maximum of 75% of net income). For the provincial tax portion, Ontario residents can claim 6.05% of the first $200 and 11.16% of any amount over $200.
You should also know that these amounts can also be carried forward for up to 5 years and can be accumulated and claimed in later years. For example, if you only donated $150 in 2016 and you plan to donate $200 in 2017, you can claim $350 on your 2017 tax return. This will allow you to qualify for the higher credit allowance (if the donation exceeds $200).
If you are self-employed you can claim a lot of expenses incurred while conducting business. For example, if your home office is your principal place of business (or used to conduct meetings with clients regularly), you can claim a deduction for part of your mortgage interest, property taxes, home insurance, utilities, and other home expenses you incur. If you rent your home, part of your rental expense can be deducted.
Other deductible expenses include advertising and promotion costs, meals and entertainment (only 50% of this is deductible), subscriptions, office supplies, a portion of your vehicle expenses etc.
Which of the following expenses have you overlooked in the past? Are you eligible to deduct any of these expenses from your tax return this year?