The Learning Centre:
Tax credits: what you don’t know can cost you.
When it comes to tax time… are you taking advantage of ALL of the tax credits available to you? If you're note sure, chances are... you're not.
In fact, according to the Canada Revenue Agency (CRA), the bulk of Canadians are not claiming all of their eligible tax credits. Which means many of us are potentially missing out on bigger returns.
After paying taxes year in and year out on your hard-earned educator salary—are you really wanting to let the government keep extra money that should be coming back to you? We didn’t think so.
To ensure you receive the tax refund owing to you, we’ve assembled some of the eligible tax credits (that perhaps you didn’t know about) that are very specific to education members:
Union dues: You’ve paid your dues… now get ‘paid’ for paying them. Membership dues for unions can be deducted on income tax returns—so if you haven’t been doing so already, be sure to claim those dues to help lower your taxable income and potentially increase your tax refund. Visit the Canada Revenue Agency for more information on tax credits for union dues.
Part-time travel costs: Are you a part-time teacher or support staff worker doing double duty at more than one school? Well if you’re a part-time educator working at two locations (or more), you can deduct a portion of the costs of getting from one school to the other if the distance is at least 80 kilometres from your home. The Canada Revenue Agency offers for more information on tax credits for part-time travel costs.
At home classroom costs: If you have an official tutoring business on the side operating out of your home (‘official’ meaning that your tutoring services are registered as any other home business would be), you can claim everything from your rent/mortgage interest, utilities, property taxes, and repairs and maintenance costs. (FYI: if your home tutoring space is 15% of the total square footage of your home, you can deduct 15% of your home tutoring expenses from your taxable income). For more information on tax credits for at home classroom costs, visit the Canada Revenue Agency.
What happens if you’ve already filed your return? Do you lose out on the tax credits you didn’t claim?
If you filed your taxes before knowing you could claim a certain deduction, no worries. The CRA allows corrections and omissions for a 10-year period. So it might be worth the time involved to go over the last 10 years of returns—just in case you have a lot more money owing to you than you thought.
A few more tax breaks to keep in mind:
Charitable donations: Everyone knows you can deduct charitable contributions. But did you know you could also deduct the cost of transportation to a charitable event? Keep track of your mileage and deduct it come tax time—and of course be sure to collect those tax receipts when donating to charity.
Tip: Charitable donations result in a larger tax credit once the total value donated exceeds $200. Since charitable donations may be saved for up to five years, compiling them for a few years and claiming them all in one year will give you a larger total credit than claiming a small amount every year.
Your first home: If you purchased your first home a few years ago and forgot to mention it on a past return, you may want to dig up those old tax files. If you’re in the process of buying your first home, there’s a nonrefundable tax credit of $5,000 that may be claimed in the tax year of the purchase.
Moving from your home: Moving expenses are also often missed and that doesn’t only mean the amount you spent on a moving truck and boxes. That’s because real estate commissions (which can run into five figures) are part of the claim and available if you moved at least 40 kilometres. If you assume those commissions were $20,000; at a 40% marginal tax rate, that’s worth $8,000 to you!
Kids’ activities and lessons: If junior is enrolled in pricey skiing lessons in the winter and soccer camp in the summer, you’ll be able to get some of those costs back in the form of a credit. The Children’s Fitness Tax Credit allows parents to claim up to $500 of the costs for any children less than 16 years of age to participate in fitness activities such as sports teams and lessons.
Further tax breaks: Public transportation passes (single fares don’t qualify, weekly and monthly passes do), as well as daycare both qualify as further breaks, so be sure to save those receipts!
When it comes to tax credits, the more you know—the more you’ll be in a position for happy returns.
If you’re still unsure whether you qualify for certain credits, be sure to talk with your accountant or refer to the CRA’s website. For those of you expecting a refund, don’t put it to waste. Educators Financial Group can help you make that extra money work extra hard for you. Here are few ways to get a jumpstart on maximizing that tax refund.
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Please ensure to consult your accountant and/or legal advisor for specific advice related to your circumstances. Educators Financial Group will not be held responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a result of the aforementioned information. The information presented was obtained from sources that are believed to be reliable. However, Educators Financial Group cannot guarantee their completeness or accuracy.