Did you know that most Canadians either receive a refund on their taxes or owe nothing at all? Only a small percentage have a balance owing. But no matter where you land on the chart, there are ways to get more from your tax refund or help lower the amount you owe.
The first and most obvious tip is to file your taxes on time. Filing your taxes late means that you’ll be charged a late fee in addition to any interest on your balance if you owe money. Submitting your tax file by the deadline is the easiest way to save money. Here are seven more opportunities to receive a larger refund on your annual taxes.
Working From Home Benefit
You can claim a tax benefit if you work from home by filling out a detailed T2200. You can claim certain items, including a percentage of your home and relevant bills, depending on your business. The Canada Revenue Agency (CRA) meticulously tracks home business claims, so you will be required to keep detailed records and receipts for the amounts you submit. For the 2021 tax year, the Canadian government has extended the pandemic work-at-home benefit, which means you can claim up to $500 for your at-home work expenses without filing a T2200.
The deadline for Registered Retirement Savings Plans (RRSPs) contributions is March 1. Your contribution limit depends on your income level but maxes out at 18% of your annual income or $27,830, whichever comes first. Any leftover room gets carried over to your next year. This means that if you had extra room from previous years, then your limit may be higher. RRSP contributions are ideal because they reduce the tax you need to pay in the current year while simultaneously helping you work toward retirement fund goals. Your financial advisor can help you calculate your best options for RRSP investing, including how to maximize spousal RRPS contributions if your income levels are significantly different.
Another account to utilize to maximize your savings on tax filings is the Tax-Free Savings Account (TFSA). Similar to your RRSP, there is an annual limit on TFAS contributions that is the same for everyone. The total is cumulative, so if you did not use it the previous year, your contribution total would carry over. It’s important to follow your limit as there are penalties for contributing too much to your account. These limits can be found online under your CRA My Account. The biggest perk of the TFSA is that when you withdraw your funds, you are not taxed on the amount. Whether you’re saving for retirement or need it sooner to cover other expenses, you’re saving money on taxes.
Qualifying Medical Expenses
The government allows you to claim qualifying medical expenses, depending on the ratio to your income level. If you paid for medical expenses, such as contact lenses, dental work, or psychotherapy services, you could claim those expenses. We recommend keeping detailed records and receipts to back up all your claims because the CRA frequently verifies these claims.
Moving For Work
If you moved more than 40 km for a job, you could claim tax deductions on some of your moving expenses. For example, the transportation costs, storage fees, and even realtor commissions associated with moving from one location to another for employment purposes can all be claimed in your tax return. Receipts must be kept and submitted to support your claims.
Another great way to save money on taxes is by claiming any donations to charities you make throughout the year. Were you compassionate at Christmas and donated to your local food bank? Are there causes you support on a regular basis? Either of those can count towards tax deductions with the proper charitable receipt to show as proof.
Tuition and Student Loans
Students can also get an additional break on their taxes by claiming their tuition expenses and sometimes even money spent on required books. If you took out a student loan, you could also claim the interest you pay on that loan. Your educational institute will issue a specific receipt for tuition claims, and your loan provider can also provide specific documentation.
Tax Organization and Advice in Edmonton
The best way to get the most out of your tax return is to consult a financial expert. At Regan Schiller & Associates, we can recommend tax benefits you may not know about, or other opportunities for saving that are specific to your circumstances. We’ll also help with tax organization to ensure your receipts and paperwork are in order so that when you file, nothing is missing, no matter what stage you’re at in life.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Regan Schiller & Associates is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.