Every year in Canada, millions of dollars in tax deductions and credits go unclaimed. Today, I’m going to introduce you to some of these deductions and credits so you can minimize your tax bill and maximize your refund. Over the next few weeks, I’ll delve into more detail about most of these credits, helping you get ready for tax time.
1. Medical expenses
Often, people don’t claim their medical expenses because they don’t think it’s worth it. However, medical expenses are hidden everywhere; even the additional amount you pay for gluten-free food may qualify as a medical expense if recommended by a doctor. In addition, what the CRA describes as “Medical expenses for self” actually includes medical expenses for you, your partner, and your minor children.
2. Disability tax credit
The disability amount is one of the most valuable Canadian tax credits, worth about $1,500 for an adult and even more for a child. Even if you can’t take advange of the entire credit—e.g., because your income isn’t high enough—the unused part of this credit can be transferred to a wide range of people.
The reason the disability amount is often overlooked is because it covers a broad spectrum of physical and mental impairments, many of which aren’t typically associated with a disability. Children with with ADD, ADHD, Asperger’s Syndrome, anxiety disorders, autism, bi-polar disorder, diabetes (type 1 or 2), epilepsy, FASD, learning disabilities, or manic depression might be eligible for this credit.
Next week, we’ll go into greater detail about this credit, what type of impairments might qualify, and how to get the proper paper work on file with the CRA so that you are able to claim this on your return.
3. Amounts for your children
There are several tax credits available for parents; so many, in fact, that these credits will be the subject of an upcoming blog post. Some of these credits include the “amount for children under 18” (a tax credit available simply because you have children), childcare expenses, amounts for your child’s fitness and arts programs, and, if you are a new adoptive parent, adoption expenses.
4. Eligible dependant amount
If at any time in the year you were single, divorced, separated, or widowed and you were supporting a person who lived with you in a home that you maintained, you may be able to claim a tax credit for an eligible dependant. Starting in 2012, that amount can be increased if you qualify for the new family caregiver amount for your dependant.
5. Moving expenses
Most people know that if you’ve moved to a new location to start a new job or business you can get a tax credit for your moving expenses. However, many people don’t realize that you can also claim moving expenses if you are a student who has moved to study in a full-time program. One of the most frequently overlooked moving expenses: the commissions you paid to your realtor when selling your old home.
6. Student loan interest
Don’t toss those Statements of Interest Paid! Repaying your student loan can be a drain in your early career, but at least you’re eligible for a tax credit for the interest you pay on federal and provincial student loans. Note, however, that this credit does not apply to loans held with a private lender, (e.g., a student line of credit with a financial institution), or to student loans that have been consolidated.
Your student loan interest can be carried-forward for five years, so if you are unable to use your interest in the year, you should consider carrying it forward to a higher earning year. We’ll go into greater detail about what it means to be able to “use your credits” in a later post.
7. Public transit passes
Keep the receipts for your bus passes because you can get a tax credit for certain public transit passes. The credit is available for:
- monthly (or longer duration) transit passes,
- shorter duration passes if each one entitles you to unlimited travel for 5-day period and you purchase enough of these passes so that you are entitled to unlimited travel for at least 20 days in any 28-day period, or
- electronic payment cards when used to make at least 32 one-way trips during a 31-day period.
If you spend $100 a month on transit passes, claiming this credit can mean an extra $180 in your pocket, the cost of almost two monthly passes!
8. Carrying charges
One of the most often overlooked deductions are your “carrying charges”, which can reduce your taxable income. It’s not surprising that these are often missed, since the name “carrying charge” isn’t exactly crystal clear. Even if you don’t have very complicated investments, you may have carrying charges that include:
- the amount that you paid for your safety deposit box, or
- some of your investment advisor’s fees (but not their commissions).
9. Charitable and political donations
Small deductions to eligible charities can add up over the year. If you claim your charitable donations, you can receive a 15% credit on the first $200 (worth $30) and a 29% credit on donations in excess of $200—up to a maximum of 75% of your income in the year. You can also receive tax credits for donations made to federal and provincial political parties and candidates.
10. Home buyers’ amount
If you purchased a home and you have not lived in a home owned by you or your partner in any of the four-preceding years (or you have you purchased a home and you can claim the disability amount), you might be eligible for a $5,000 tax credit—worth up to $750. If you qualify for this amount, claiming this credit is a simple as ticking a box.