12 tax tips that Canadians can take to the bank

There are plenty of ways to increase the amount of savings from the Canada Revenue Agency if you know how to make use of a dozen deductions and tax credits

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      Many Canadians have been so busy responding to COVID-19 that they haven’t had time to think about their taxes.

      That’s because they’ve been adjusting to working from their living rooms if they’re among the lucky ones who are still employed.

      Or they're scrambling to cover expenses if they’re part of the three million Canadians who lost their jobs in March and April.

      Then there are the challenges of homeschooling, which many parents have been forced into because their kids' schools are closed.

      That's on top of two spouses being on the premises, sometimes in relatively small spaces, trying to juggle work and their kids’ education.

      But it’s also important to keep in mind that the federal tax deadline is Monday (June 1) for those who file T1 returns, which is used for personal income taxes.

      The self-employed can wait until June 15.

      Keep in mind that all taxes must be paid by September 1 to avoid penalties or interest.

      H & R Block Canada has helped Canadians file more than 50 million tax returns over 55 years.

      It has a long list of tax tips on its website, covering a range of topics. Here are just a few.

      Employment expenses

      The Canada employment amount of $1,245 can be claimed to cover incidental employment expenses, even if the person has no receipts. Other employment expenses can only be claimed if the taxpayer has obtained from their employer a signed T2200 Declaration of Conditions of Employment. In this instance, the taxpayer must retain supporting receipts.

      Freelance work

      Contractors doing freelance jobs usually don't have any tax deducted at the sourse, which can pose a challenge when it comes time to file a tax return. One way to avoid a nasty surprise is to create a separate bank account to deposit funds that will later be used at tax time. Reasonable business expenses may be deducted from your income. However, unusually high business claims can sharply elevate the likelihood of being audited. And don't forget that the self-employed are required to pay the employee and employer portions of Canada Pension Plan contributions. On the upside, they are eligible for a deduction for the employer portion and a nonrefundable tax credit for the employee portion.

      Child-care expenses

      According to H & R Block Canada, lunchtime supervision costs can be claimed as child-care expenses. This is also true for costs of before-school and after-school programs.

      Student loan interest

      This can be claimed as a tax credit, which means it gets deducted directly from the amount of tax owed. But interest on private loans or lines of credit cannot be claimed on a tax return.

      Severance packages

      These are taxable as lump-sum payments. For very long-term employees, it’s sometimes possible to transfer some of this to a registered retirement savings plan, which would shield it from being taxed until it’s withdrawn from the plan.

      Homebuyers’ amount

      It’s possible to claim $5,000 for the purchase of a “qualifying home” over the previous year if you did not live in another home owned by you, your spouse, or your common-law partner in any of the four preceding years. A qualifying home can be a single-family house, semidetached house, townhome, mobile home, condominium, or an apartment in a duplex, triplex, fourplex, or apartment building. It’s possible to make this claim if you buy a share in a cooperative-housing corporation that gives you an equity interest in the property. But no claim can be made if the share only provides the right to tenancy rather than homeownership.

      Part-year residents

      Everyone must report their world income after they move to Canada. Moving expenses are not deductible except if a student is studying at a postsecondary institution. In this instance, moving expenses can be deducted against the taxable portion of scholarships, bursaries, fellowships, prizes, or research grants.

      Out-of-country tuition costs

      If the school outside of Canada is recognized by the Canada Revenue Agency, the taxpayer can deduct tuition costs.

      Canadian tuition

      Only students are eligible to claim a credit for college and university tuition. Even if parents covered the cost, they cannot deduct this expense from their taxes. Students must obtain a T2202A form from their postsecondary institution, which also enables them to claim education amounts offered by provinces that still offer this.

      Tuition carry-forwards

      Because students often have lower incomes, they aren't always able to make use of all of their tuition credits. In this instance, they can carry forward some of this amount to future years to be claimed in a tax year when their incomes will be higher.

      Postsecondary students living at home

      If you're a parent and you have a child over the age of 18 living at home, you cannot claim them as a dependent unless they are infirm.

      RESP income

      Again, only students can claim any income collected from an RESP in Canada, even if the parents contributed the money.

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