It’s tax time again. You may be in the habit of completing your own tax return or having a professional do it for you. Either way, make sure you have the details and supporting documentation to get the most out of these five tax credits.
If you incur certain work related expenses for which you are not reimbursed, you may be eligible for an employment tax credit. Employees can claim a 15% tax credit to a maximum of $1,178 (2017). If your income is low, you may also be eligible for a Working Income Tax Benefit tax credit.
If you are self-employed or your contract of employment requires you to maintain a home office, pay for supplies, an assistant or substitute, you may be able to deduct reasonable costs related to conducting business. Expenses may also include travel expenses, artist’s tools, tradesperson’s tools and musician’s instruments. You or your business may be able to claim a rebate of GST/HST paid on most, eligible, work related purchases depending on whether you are employed or self- employed respectively.
Certified teachers may claim a 15% refundable tax credit up to $1,000 for school supplies they pay for to run classes. Eligible expenses include stationary items, educational support software, books, games and items for science experiments.
In most cases, life insurance premiums are not tax-deductible for businesses or individuals. However, there are exceptions that you should know about. One example is when life insurance is used for charitable giving, but the charity has to own the policy. If you own the policy and name the charity as a beneficiary, you do not get a tax credit for the premiums. It is highly recommended that you speak with a licensed advisor who knows the intricacies of life insurance.
These expenses are often missed. They include prescriptions, doctor’s fees, visits to the dentist, private health coverage, hearing aids and eyeglasses. You pay for them throughout the year. Sometimes you misplace or forget about them.
You can combine eligible medical expenses incurred by yourself, your spouse/common-law partner and minor children. The expenses incurred by children in full-time post-secondary schools may also qualify. The lower income spouse generally claims these expenses since they are based on eligible expenses in excess of 3% of net income. The pooled expenses are eligible for a 15% federal tax credit. Please click here to see a more expansive list of eligible medical expenses.
Say you move to a new location for work or to start a business and the new location is 40 km. closer to your new work location. Moving expenses may be deductible to the extent they are not covered by your employer. The list includes:
- travelling expenses for you and your family including lodging, meals and transportation
- fees incurred for changing driver’s licences and vehicle registration, legal documents, identification and your address
- selling costs for your old home like real estate commissions
- title transfer and legal costs for your new home
- utility disconnection and hook-ups
- moving and storage costs for your household effects
If you are a full-time student and you move to attend school that is 40 km. closer than where you are now, you may be eligible to claim moving expenses. You may claim unused moving expenses in a future year.
If you pay interest on eligible loans to go to school, you may be eligible for a non-refundable student loan interest credit. Qualifying types of loans include those covered under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act and equivalent provincial programs. If you set up a line of credit to help fund your studies, those interest charges do not qualify. If you don’t need the deduction this year, you may carry forward unused interest costs for up to five years.
It’s helpful to have a general understanding of these 5 tax credits, but speaking with an expert can ensure you get your finances in place during the tax season. For example, a life insurance advisor can help clarify insurance deductions since it is only applicable in some cases like charitable giving.