Tax season can be a delicate equilibrium – we love it when we get a return but we’re not as fond of it when we end up owing. Couple that with the ambiguity of not knowing what tax deductions to claim, and if we actually qualify to claim it, and we can end up missing out on opportunities that can cost us money in the long haul.
Below, we’re going to highlight six expenses that can be deducted(and are often overlooked) on your tax return to ensure that you’re getting the most out of it.
1. Childcare Expenses Can Be Deducted on Your Taxes
Did you pay someone to look after your kids while you were working or going to school? Whether that looked like daycare, summer camps, boarding schools, or hiring a caregiver, you more than likely qualify for reimbursement on your taxes.
The government allows for you to deduct up to $8,000 per child for children under seven years of age. You can also deduct up to $5,000 per child for those aged seven to sixteen. For disabled children of any age, the maximum claim is an $11,000 deduction on your tax return.
2. Education Interest Can Be Claimed Over Multiple Years
If you or your child is attending post-secondary school, tuition fees can be deducted when you file taxes. Your tuition fees are unique to the school you’re attending so make sure that you have that information available to you when you’re ready to file.
You can also deduct the interest paid on a student loan if you received it via federal or provincial legislation. Some of the most common are the Canada Student Loans Act, Canada Student Financial Assistance Act, and the Apprentice Loans Act. Unfortunately, you cannot claim this deduction on your taxes if you are using a personal line of credit or a private loan.
Most important is to use education tax deductions wisely if you qualify. If you owe taxes, apply the deduction. If not, carry the interest forward. You can apply the accumulated total to a future tax return within a five year period. This may help you avoid owing taxes later down the line.
3. Medical Costs May Be Tax Deductible, Even If You Have Healthcare
If you tapped out your benefits plan or used up what was left in your health spending account, keep track of any medical expenses that you had to pay out of pocket. The CRA allows you to claim certain medical expenses on your tax return – so you may, actually, qualify for some additional financial relief.
Allowable medical expenses range from hearing aids, to contact lenses, to dental work, and much more – but you’ll need documentation to provide proof for any claim you plan on making.
For a complete list of qualified medical expenses, click here.
4. Moving Expenses Have Hidden Tax Deduction Benefits
Over the course of the year, did you move more than forty kilometers to work, run your business, or study full-time? If you answered yes, then you can submit a T1-M Form and have some of the costs associated with your move deducted from your income tax.
Expenses include, but are not limited to, storage and packing, temporary accommodations, transportation, and realtor expenses. Additionally, if you sold property as a result of the move you can deduct costs associated with your sale – such as advertising, mortgage penalties, legal fees, etc.
Claims can also be filed for incidental expenses, such as having to change your address on legal documents or having to be issued a new driver as a result of the move.
5. Donations to Charity Can Always Be Applied to Your Tax Return
If you donated to a registered charity over the last year, keep those receipts! When you donate, you qualify to claim the Charitable Donations Tax Credit which will reimburse you for part of your generous donation.
At a provincial level, the return on your tax credit will vary. In Alberta, donors receive a 35% tax credit on their first $200 of donations and a 50% non-refundable tax credit for every dollar they donate over the $200. At the federal level, your credit will be a 15% return on your first $200 of donations. Anything beyond that amount will qualify you for a 29% return.
Depending on what tax bracket you fall into, you may qualify for as much as a 33% return… so keep track of your donations and be sure to get a digital or printed record from the donees.
6. Work Expense Deductions Depend on Your Employer
If your employer requires you to purchase or pay for anything as a part of your job, you can claim those expenses on your income tax. However, you must provide a T2200 form which is a Declaration of Conditions of Employment signed by your employer.
From car expenses and accommodations when you’re required to travel, to the cell phone you use to call clients, to the tools you buy as a tradesperson, many work expenses can be written off.
The exception to this is if your employer fully reimburses you, or provides you with an allowance that covers the cost of these expenses. Since the expenditure has already been rectified, it no longer qualifies as a work expense.
IAPC Has You Covered During Tax Season
Knowing the tax deductions you are eligible for is a great way to maximize your tax return so you can keep more in your own pocket. Having an accountant you can count on to know the most up-to-date list of potential income tax deductions is key to making the most of tax season.
Book a free consultation with one of our trusted Chestermere Chartered Professional Accountants today. We’ll be happy to answer your questions about your taxes and accounting needs!
